Consumer prices fell 0.2 per cent in the December quarter according to official figures, driven by typical falls in vegetable prices, but more discounting in furniture.
The drops were partly countered by higher housing and transport costs.
The drop in quarterly inflation held annual inflation down at just 0.9 per cent for the year to December. The annual rate was 0.8 per cent in the year to September. The extremely low inflation rate points to interest rates staying on hold for some time.
"The CPI has fallen in four of the past five December quarters - the exception being 2010, after the GST increase," Statistics NZ prices manager Chris Pike said.
Lower prices for food (down 1.8 per cent), household contents and services (down 1.8 per cent), and communication (down 2.0 per cent) were the main contributors to this quarter's fall.
These were partly offset by rises for housing and household utilities and for transport - both up 0.6 per cent.
The fall in food prices was due to seasonally lower vegetable prices (down 16 per cent). Prices for tomatoes, lettuce, and capsicums were about half what they had been in the previous quarter.
The fall for household contents and services was largely due to lower prices for furniture and furnishings (down 6.2 per cent), reflecting higher levels of discounting.
"One in four furniture and furnishing prices was discounted in the December quarter, compared with one in five in the September quarter," Pike said.
Petrol prices (down 0.8 per cent) also fell in the December 2012 quarter. They are now 1.7 per cent below their June 2012 quarter peak. Petrol prices were cut 3 cents a litre earlier today, to just under $2.10 a litre for 91 Unleaded.
Increases for housing and household utilities reflected higher prices for property maintenance services (up 2.0 percent due to seasonally lower government subsidies for insulation and heating), rentals for housing (up 0.3 percent), and purchase of newly built houses (up 0.5 percent).
Higher transport prices were influenced by a rise in international air fares (up 9.8 percent). This is the largest quarterly rise since the December 2009 quarter, when fares rose 14 percent.
"International air fares usually rise in December quarters. This quarter's rise reflects seasonally higher fares to Asia, and higher fares to Australia after a dip in the September 2012 quarter," Pike said.
Annually, the CPI increased 0.9 percent in the year to the December 2012 quarter, due to increased prices for cigarettes and tobacco (up 13 per cent), rentals for housing (up 2.4 per cent), and electricity (up 5.2 per cent).
These movements were partly offset by decreases in the price of telecommunication services (down 5.7 per cent), audio-visual equipment (down 17 per cent), and fresh milk (down 9.5 per cent).
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