New Zealand’s terms of trade fell 9.0 percent in the June 2026 quarter. That is the largest quarterly fall since June 2009 and the fifth largest since Stats NZ’s series began in 1957. It happened in a quarter when the prices New Zealand received for its exports rose 3.5 percent.
Both of those things are true at once because the fall came entirely from the import side. Import prices rose 13.8 percent over the quarter. Petroleum and petroleum product prices rose 79 percent. Strip fuel out and import prices rose 2.1 percent, less than export prices did. Without fuel, the terms of trade would have improved.
Newswire reported the headline figures when Stats NZ published its international trade release on 3 September. This piece takes the full price series back to 1957, the Reserve Bank’s exchange rate and interest rate tables and the June quarter consumers price index, and asks what kind of fall this was. The June quarter trade indexes are provisional and will be revised.
What the terms of trade measures
The merchandise terms of trade is the ratio of export prices to import prices. When it rises, a fixed quantity of exports pays for more imports. When it falls, the same shipments of milk powder, beef, logs and kiwifruit buy less fuel, machinery and medicine than they did three months earlier.
Stats NZ sets the June 2002 quarter at 1000. The index stood at 1592.8 in the December 2025 quarter, eased to 1562.0 in March and dropped to 1421.4 in June. That is 9.4 percent below the June 2025 quarter and the lowest reading since June 2024. It is still above the average for 2010 to 2025, which was 1385.9. The fall is large by any standard, but it is a fall from a high base.
The import side
Import prices for all merchandise rose 13.8 percent in the quarter and 15.2 percent on a year earlier. On Stats NZ’s quarterly series, which runs from 1949, that is the largest quarterly rise since the September 1984 quarter, when import prices rose 16.3 percent in the quarter in which the incoming Lange government devalued the dollar by 20 percent. The only other larger rises were in December 1975 and March 1968. The June 1974 quarter, at the height of the first oil shock, produced a rise of exactly the same size as this one.
Almost none of this was spread across the import basket. Stats NZ’s index for all merchandise imports except fuels rose 2.1 percent in the quarter and 4.0 percent on a year earlier. By broad economic category, intermediate goods rose 26.1 percent because fuel sits inside that group, while capital goods were flat at 0.0 percent and consumption goods rose 1.6 percent. The machinery, vehicles, clothing and food that make up most of what New Zealand buys cost about what they did in March.
The fuel lines tell the story on their own. Stats NZ’s headline petroleum and petroleum products index rose 79 percent. Inside that, the index for processed fuels other than petrol and avgas, which is mostly diesel and jet fuel, rose 86.7 percent. That series begins in 1989 and its previous largest quarterly rise was 50.6 percent in June 2022, followed by 45.3 percent in the Gulf War quarter of December 1990. Petrol and avgas rose 55.5 percent.
The petroleum import price index now stands 8 percent above its previous peak in the September 2022 quarter. New Zealand responded the way buyers do when prices jump, cutting petroleum import volumes by 9.0 percent, and still spent 63 percent more on them. The petroleum bill rose from $2.29 billion in the March quarter to $3.73 billion in June. Fuel took 17.1 percent of the total import bill in the quarter, up from 11.5 percent in March and the highest share since June 2014.
The export side
Export prices for all merchandise rose 3.5 percent in the quarter and 4.4 percent on a year earlier. Meat prices rose 4.5 percent in the quarter and are 19.3 percent higher than in June 2025. Dairy product prices rose 3.3 percent in the quarter, though they remain 6.7 percent below a year earlier after falls through late 2025 and early 2026. The combined index for all pastoral and dairy products rose 4.0 percent. Aluminium rose 16.9 percent in the quarter and 46.6 percent on the year.
Volumes moved the same way. Stats NZ reports export volumes for goods rose 6.4 percent, with meat volumes up 10 percent and dairy volumes up 3.9 percent. Farmers and processors sent more product out and were paid more per unit for it. In the accounts of an exporting business, the June quarter was a good one.
The overseas trade indexes are the only place where both halves of that business are published on one base, what the country sells and what it buys. In this quarter the two halves pulled in opposite directions, and the buying side won by a wide margin.
How this fall compares with 1974 and 2009
Five quarters since 1957 have seen the terms of trade fall by 9 percent or more. The table shows what export and import prices did in each of them.
| Quarter | Terms of trade | Export prices | Import prices |
|---|---|---|---|
| March 1975 | -14.1% | -4.7% | +10.9% |
| June 1974 | -14.0% | -2.1% | +13.8% |
| September 1974 | -10.3% | -4.3% | +6.8% |
| June 2009 | -9.4% | -11.9% | -2.8% |
| June 2026 | -9.0% | +3.5% | +13.8% |
In each of the four earlier falls, export prices were falling too. The 1974 and 1975 falls combined an oil-driven surge in import prices with falling wool and meat prices. The June 2009 fall was the mirror image of this one. Import prices fell 2.8 percent as the world economy shrank, and the terms of trade fell anyway because dairy export prices collapsed. June 2026 is the first fall of this size in the series where the export side was rising.
Widen the net to falls of more than 5 percent and only two earlier quarters share that shape. In September 1979 the terms of trade fell 5.9 percent while export prices rose 3.8 percent. In December 1990 it fell 5.5 percent while export prices rose 0.9 percent. Those quarters coincided with the second oil crisis and the Gulf War. Every sharp fall in New Zealand’s terms of trade during a quarter of rising export prices has coincided with a jump in the price of oil.
The 2022 episode looked similar but was smaller. The terms of trade fell 2.3 percent in June 2022 and 3.9 percent in September 2022 with export prices rising in both quarters. The difference was that import prices excluding fuel were also climbing quickly then, by 3.4 percent and 4.3 percent, as shipping and manufactured goods prices rose worldwide. This time the ex-fuel basket is quiet and the whole move is concentrated in one commodity.
The exchange rate is not the channel
Import prices in the trade indexes are measured in New Zealand dollars, so a weaker currency can produce a rise on its own. That did not happen here. The Reserve Bank’s monthly average exchange rate for the New Zealand dollar against the United States dollar was 0.5857 in March 2026 and 0.5778 in June, a fall of 1.3 percent. The trade weighted index moved from 66.81 to 66.09, a fall of 1.1 percent.
A currency move of that size accounts for perhaps one percentage point of the import price rise, which is roughly what the ex-fuel import index shows. The other twelve points are the world price of fuel arriving on a small open economy that has no influence over it. This was a world price event, not a currency event, and that distinction matters for what happens next. A devaluation feeds through to every import. A fuel price spike can reverse.
Why the shock arrives in full
New Zealand has not refined oil since Marsden Point stopped processing crude at the end of March 2022 and became an import terminal. The change shows up in the statistics. Stats NZ’s import price index for crude oil ends in the March 2022 quarter, because there was nothing left to measure. Every litre of petrol, diesel and jet fuel now arrives as a finished product at the international price for finished product.
That makes the historical comparison less tidy than it looks. In the Gulf War quarter of December 1990, the crude oil import price index rose 72.7 percent while the index for processed fuels rose 45.3 percent. The two series measured different things and moved by different amounts. Today only the processed series exists, and it is the one that rose 86.7 percent. The Reserve Bank noted in its 2 September statement that “Global supply chains, refining capacity, and trade flows remain disrupted”, which is the part of the price New Zealand used to absorb at Marsden Point and now pays for at the wharf.
Newswire has followed the supply side of this since the Strait of Hormuz was effectively closed at the end of February, most recently in a feature on New Zealand’s fuel stocks five months into the crisis. The trade indexes are the price side of the same story.
Explore the data. Follow what the June quarter’s import prices did at the pump, week by week and by region, in our weekly fuel prices tracker, and see import volumes and stock cover in the New Zealand fuel situation tool.
The same price move at the pump
The consumers price index for the June 2026 quarter covers the same three months as the trade indexes, so it shows the retail face of the same price move rather than a consequence of it. Stats NZ reported on 21 July that the CPI rose 1.5 percent in the quarter and 4.1 percent on a year earlier, up from 3.1 percent in March.
Transport prices rose 6.0 percent in the quarter and 10.6 percent on the year. Petrol rose 20.1 percent in the quarter and 27.5 percent on the year. Other vehicle fuels and lubricants, a group that includes diesel, rose 47.7 percent in the quarter and 71.0 percent on the year. Food rose 0.4 percent in the quarter.
The tradables and non-tradables split shows where the inflation came from. Tradables inflation, the part of the CPI most exposed to world prices and the exchange rate, jumped from 2.5 percent in the year to March to 4.9 percent in the year to June. Non-tradables inflation, the domestic part, edged down from 3.5 percent to 3.4 percent. The Reserve Bank put it another way in September. “Excluding vehicle fuels, annual CPI inflation decreased to 2.9 percent in the June quarter.”
Interest rates moved before the trade figures did
The sequence in the interest rate data is worth setting out in order, without drawing the line between the points. The Reserve Bank’s monthly average two-year swap rate was 3.03 percent in February 2026, 3.31 percent in March and 3.56 percent in May. It dipped to 3.39 percent in June and was 3.65 percent in August. Markets were pricing higher rates from late summer, before the June quarter data existed.
The official cash rate had been cut to 2.25 percent in November 2025. The Reserve Bank raised it to 2.50 percent on 8 July and to 2.75 percent on 2 September. Eight months passed between the last cut and the first rise. In the 2020 to 2021 cycle the same turn took 19 months. You can see the whole path on our official cash rate tracker.
In its September statement the Monetary Policy Committee said “Inflation increased to 4.1 percent in the June quarter because of higher fuel prices arising from the conflict in the Middle East.” In July it had noted that “Following the partial reopening of the Strait of Hormuz, global oil prices have fallen markedly.” Both statements are on the record and readers can draw their own inference about how the trade figures, the CPI and the cash rate fit together. The data here only shows that they moved in the same direction in the same months.
What the data settles and what it does not
The data settles four things. The June 2026 terms of trade fall is accounted for by fuel import prices, with the rest of the import basket rising 2.1 percent. Export prices were rising, not falling, which makes this unlike 1974, 1975 and 2009. The exchange rate barely moved, so this was a world price event. And the retail price of fuel moved in the same quarter, lifting tradables inflation while domestic inflation held steady.
It does not settle whether the fuel move persists. The Reserve Bank’s July statement said oil prices had already fallen markedly by then, and its September projections assume that “New Zealand’s terms of trade are projected to resume their long-run upward trend.” The September quarter trade indexes, due in early December, will show whether that has started.
It does not settle what the fall does to real incomes over the year. A terms of trade fall makes the country poorer in what its output can buy, but how much poorer depends on how long it lasts and who absorbs it. Exporters were paid more, motorists and freight users paid more, and the net effect will appear in the national accounts measure of real gross national disposable income for the June quarter, which Stats NZ publishes with GDP later in September.
And it does not settle what the Reserve Bank does next. That depends on whether a one-quarter import price shock turns into persistent domestic price setting, which is a question about behaviour rather than trade indexes. The ex-fuel import prices and non-tradables inflation figures above are the ones to watch for that. So far, both are quiet. You can follow the headline indicators as they update on our New Zealand economy dashboard.
Notes on the data
Terms of trade, export and import price figures are from Stats NZ’s overseas trade indexes for the June 2026 quarter, which are provisional. Quarterly changes are calculated from the published index numbers and rounded to one decimal place. The “largest since 1989” comparison for processed fuel import prices refers to the length of that particular Stats NZ series, not to the history of fuel prices. Exchange rates are Reserve Bank monthly averages from its B1 table. Swap rates and the official cash rate are from its B2 table. CPI figures are from the June 2026 quarter release.
Has the fuel price rise changed what you pay for, what you charge or how you get around? Tell us in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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