WELLINGTON, Sept 6 — New Zealand’s terms of trade suffered their steepest quarterly deterioration in over a decade during the June 2026 quarter, a slide driven almost entirely by a surge in fuel import costs that analysts say will weigh on the country’s income outlook through the second half of the year.
Stats NZ’s international trade release, published on 3 September, showed the merchandise terms of trade index fell 9.0 percent in the June quarter — the largest quarterly fall since June 2009 and the fifth largest since the series began in 1957. The index dropped to 1421.4, down 9.4 percent from the June 2025 quarter and the lowest reading since June 2024, though still above the 2010–2025 average of 1385.9.
The deterioration came despite export prices rising 3.5 percent in the quarter. Import prices jumped 13.8 percent — the largest quarterly rise since September 1984, when they climbed 16.3 percent. Stats NZ noted the only larger increases came in December 1975 and March 1968, with the June 1974 quarter (the first oil shock) matching the 13.8 percent rise.
Fuel bill drives the swing
The fall came entirely from the import side. Petroleum and petroleum product prices rose 79 percent in the quarter, with the index for processed fuels other than petrol and avgas — mostly diesel and jet fuel — up 86.7 percent, the largest quarterly rise since that series began in 1989. The previous record was 50.6 percent in June 2022, followed by 45.3 percent in December 1990 during the Gulf War.
Petrol and avgas rose 55.5 percent. The petroleum import price index now sits 8 percent above its previous peak in the September 2022 quarter.
New Zealand cut petroleum import volumes by 9.0 percent but still spent 63 percent more: the petroleum bill rose from NZ$2.29 billion (about US$1.4 billion) in the March quarter to NZ$3.73 billion (about US$2.3 billion) in June. Fuel took 17.1 percent of the total import bill, up from 11.5 percent in March and the highest share since June 2014. Excluding fuel, the picture is markedly different.
Import prices rose just 2.1 percent in the quarter and 4.0 percent year-on-year — less than export prices — meaning that without fuel, the terms of trade would have improved. By broad economic category, intermediate goods rose 26.1 percent (fuel sits in that group), capital goods were flat at 0.0 percent, and consumption goods rose 1.6 percent.
Export side holds up
Export prices for all merchandise rose 3.5 percent in the quarter and 4.4 percent year-on-year. Meat prices rose 4.5 percent in the quarter and were 19.3 percent higher than in June 2025. Dairy product prices rose 3.3 percent in the quarter but remained 6.7 percent below a year earlier after falls through late 2025.
The June quarter trade indexes are provisional and will be revised. Stats NZ used the Reserve Bank’s exchange rate and interest rate tables and the June quarter consumers price index in its analysis.
For Asian markets watching New Zealand as a bellwether for commodity-driven economies, the key signal is the fuel share of the import bill — now at an eleven-year high — and whether the dairy recovery can offset that drag in coming quarters. The next revision of the trade data will show whether the June quarter marks a peak in import price pressure or the start of a sustained squeeze.
