Falling petrol and diesel prices were the major factor leading to a 0.3 per cent fall in inflation during the first three months of this year, the second quarter in a row of deflation.

The annual inflation rate for the year to March 31 was 0.1 per cent.

However, if the rise in petrol prices seen late in the quarter and into this month is sustained, transport fuels will have an upward impact on inflation in the June quarter, Statistics New Zealand said.

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The Consumers Price Index outcome was slightly more deflationary than the 0.2 per cent reduction anticipated in a Reuters poll of economists. The last time there were two quarterly falls in the CPI was in the December 1998 and March 1999 quarters.

The 0.1 per cent annual CPI increase is the smallest annual movement since the year to September 1999, when prices decreased 0.5 per cent in the wake of the Asian financial crisis.

Non-tradable inflation was up 1.1 per cent for the quarter, reflecting a 12 per cent increase in the price of cigarettes and tobacco caused by increasing excise taxes, a 12 per cent seasonal increase in the price of fruit, a 0.8 per cent increase in housing rents, and a 0.8 per cent rise in the cost of a newly built home, excluding land.

The data showed a slower rate of increase in Canterbury for the price of a newly built house, up 0.2 per cent for the quarter, having risen quarterly in a range of 1.3 per cent to 3.4 per cent from 2012 to 2014, as the city began its post-earthquake reconstruction.

"It is too early to say whether the latest quarterly movement for Canterbury indicates a slowdown," Statistics New Zealand said in commentary released with the CPI data.

On an annual basis, non-tradable inflation rose 2.3 per cent, the lowest since the year to September 2012, driven by a 14 per cent rise in tobacco prices, a 5 per cent rise in the cost of a newly built home, a 2.3 per cent increase in rents, and electricity prices up 3.6 per cent.

Meanwhile, tradables inflation fell 2.8 per cent, the largest fall since the series began in 1999, with vehicle fuels and lubricants down 21 per cent and audio-visual equipment prices down 13 per cent.

"Excluding cigarettes and tobacco, the annual CPI decreased 0.2 per cent; excluding petrol, the CPI increased 1 per cent over the year," Statistics NZ said.

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The biggest influences on the 0.3 per cent deflation in the March quarter were petrol, down 11 per cent, international airfares down 15 per cent, and a 6.6 per cent fall in the price of package holidays.

See the latest CPI stats here: