WELLINGTON (Reuters) - New Zealand's terms of trade fell for the first time in more than a year in the March quarter, dropping by 1.9 percent from a record high as softer dairy prices pulled down export values, official data showed on Friday.
Export prices fell 2.2 percent while imports edged down 0.3 percent, Statistics New Zealand said.
Economists were expecting a 1.5 percent fall, with export prices down 1.5 percent and import costs unchanged, a Reuters poll found.
The New Zealand dollar was largely unchanged after the data, hovering around $0.7008.
The fall was the first since September 2016. It was led by weaker values for dairy - the country's top goods export - with prices falling 6.7 percent.
Global dairy prices eased towards the end of 2017 on increased global supply, which took a few months to filter through to New Zealand exports. Economists expect a stronger outlook because global milk prices have since picked up.
"The overall picture is that the terms of trade have come off a very high level, but ... more recent developments are more supportive of export prices, which will be generally keeping pace with import prices," said Miles Workman, economist at ANZ Bank.
The dip from fourth-quarter 2017's record high vindicated the Reserve Bank of New Zealand's cautious monetary policy of keeping interest rates at an historic low of 1.75 percent indefinitely to boost soft inflation even as economic growth remains robust.
(Reporting by Charlotte Greenfield; Editing by Eric Meijer)
