New Zealand's purchasing power with the rest of the world has hit its highest level in 44 years, thanks to the recovery in dairy prices.
Photo: AFP
Official figures show the terms of trade, or the quantity of imports that can be bought with a given quantity of exports, rose by 5.1 percent in the three months to March.
Export prices rising faster than import prices meant the terms of trade were now at their highest since June 1973.
"The current high in the terms of trade is a result of a strong upwards trend in the terms of trade since 2000," Statistics NZ business prices manager Sarah Williams said.
Export prices rose 8 percent, led by a rebound in milk powder, butter and cheese.
Dairy prices jumped 18 percent, following a 14 percent increase in the December quarter. Despite the gains, dairy prices were still 21 percent lower than the recent peak three years ago.
Forestry product prices rose 11 percent to hit their highest level since measurements began in 1971, while there were also gains for aluminium and meat.
Better prices more than made up a sharp 4.6 percent fall in volumes, which followed a 5.5 percent drop in the December quarter.
Exporters shipped less dairy, with volumes plunging 19 percent over the last two quarters.
"I suspect there is a bit of stockpiling going on," Westpac Bank acting chief executive Michael Gordon said.
"We're already had the trade figures for the April month that point to a strong rebound in dairy volumes, so I think there was stuff being held back over the March quarter and will be shipped later."
Import prices rose 2.7 percent in the March quarter, largely due to more expensive crude oil, and electronic goods such as mobile phones and personal computers.
The 1973 trade peak, fuelled by higher prices for dairy, meat and wool, proved short-lived.
It fell after key export market Britain joined the European Economic Community, and after the first big oil crisis pushed up fuel prices sharply in late 1973.
"This is more of a sustained increase in our purchasing power compared to the previous high in the early 1970s," Mr Gordon said.
"We're in a much better position than this 44-year comparison suggests. We now [produce] what the fast growing parts of the world wants."