A slump in the price of dairy is being seen as a major warning sign for the economy.

The ASB's chief economist, Nick Tuffley, said they have revised their dairy payout forecast down to $5 per kg of milk solids.

Prices have hit a six year low, following a sharp drop in price during a global trade auction overnight.

The ASB is expecting three consecutive cuts in interest rates with a slow down in growth, falling dairy prices, and uncertainty in international markets.

With weaker than expected inflation, Tuffley said the Reserve Bank will be looking at cutting the official cash rate to support growth at a more reasonable level.

"We expect we will see the Reserve Bank cut the cash rate in July, September, and October by 25 points each time, and that will take the cash rate down to 2.5 percent. So essentially back to where it was before the reserve bank started raising interest rates last year."

The Labour Party has attributed the fall in dairy prices to a combination of falling business confidence, and problems in China and Greece.

Labour's finance spokesperson, Grant Robertson, said the Government has been coasting by and taking credit for the high commodity prices, when they should have been planning for the future.

"What the government has to answer for is what are they doing to plan for when commodity prices drop. We're now in that situation and National has squandered three or four years of very positive mood."

However, Prime Minister John Key said the fall in dairy prices has to some extent been counterbalanced by strong beef prices and a lower kiwi dollar.

Key said there are always ups and downs in the price of dairy and the income of dairy farmers incomes has always been volatile.

"What it probably alters is the amount that farmers borrow. When the payout is $8.40 they are probably giving money back to the bank; when it is $4.40 a few of them are taking money off the bank."

Financially stretched dairy farmers are being encouraged to seek financial advice and help.

Minister for Primary Industries, Nathan Guy, said banks are very aware of the situation that farmers find themselves in.

"Each individual farmer needs to reach out to their professional advisers, whether it is their accountant or their bank, do their own cash flow analysis, and work closely with their bank to get through it."