Petrol prices fell 5.7 percent in July and diesel dropped 12.1 percent, Stats NZ reported, as global energy costs remained lower amid US-Iran tensions. The declines marked the third consecutive monthly fall, though both fuels remained significantly higher than a year ago — petrol up 15.1 percent and diesel up nearly 35 percent over 12 months.

Food prices rose only 0.1 percent for the month, held back by the largest fall in meat and poultry prices in more than five years, offsetting seasonal rises in fruit and vegetables. The selected items measured — which account for about half the consumer price index — showed overall price growth softer than expected, with economists pointing to a potential fall of about 0.4 percent in overall consumer prices.

Economists said the figures suggest annual inflation has peaked at 4.1 percent and will ease further, though it will likely remain above the Reserve Bank's 3 percent target band for the remainder of the year. ASB senior economist Mark Smith said inflation below 3 percent was still about a year away, and the central bank would continue raising the official cash rate, with economists forecasting it could reach 3.25 percent by year end, RNZ business (NZ) reports.