Terms of trade rose 5.7% in the December 2009 quarter, the biggest quarterly gain in 33 years, as import prices fell more than export prices.
Statistics New Zealand says it is first rise in seven quarters and lifts the index off a four-year low touched last quarter.
"A rising New Zealand dollar in the latest quarter had a downward influence on both export and import prices," prices manager Chris Pike says.
The 5.8% drop in import prices was primarily driven by mechanical machinery, electrical machinery and apparatus as well as petroleum and petroleum products, and food and beverages also contributed to this fall.
Significant contributions to the 0.3% export price drop came from meat and fish and fish preparations, but was
partly offset by dairy products, which rose 5.0%, and fruit.
Seasonally adjusted export volumes decreased 1.2% in the December 2009 quarter, the first drop since September 2008.
Petroleum and petroleum products, dairy products, and fruit and vegetables were the major contributors .
Meat volumes increased, making a partly offsetting contribution to the overall volume decrease.
Seasonally adjusted import volumes rose 1.6%, the second consecutive rise thanks to capital goods and cars.
ASB economist Jane Turner says on the surface the lift is a positive but underlying the improvement is weakness in some key New Zealand export products.
"Ongoing recovery in New Zealand's trading partners is key to an improvement in export prices in the future. A fall in the dollar would also help export prices, but would be offset by a corresponding increase in import prices," she says.
"We expect some improvement in the export index in the short
term, given Q4's result did not capture the full lift observed in
dairy prices in late 2009. However, after that we expect the terms
of trade to track sideways."
