Key Points:

Petrol prices at the pump are at their lowest since January, the Automobile Association says.

Fuel prices fell sharply during October, with petrol down 23 cents per litre, and diesel 16 cents per litre.

The price of 91 octane and diesel ended the month on $1.73 and $1.32 respectively in the main centres, the lowest prices seen since the beginning of the year, AA senior policy analyst Mark Stockdale said.

"The continued reduction in pump prices reflects sustained falls in the international price of oil and refined fuel. It couldn't come at a better time for motorists, as we move into the busy summer driving season."

Petrol has dropped 46 cents per litre, 21 per cent, since reaching a record high of $2.19 on July 7. Diesel prices have tumbled 60 cents per litre, 31 per cent, down from $1.92.

"Since July, international market prices have fallen by over 50 per cent, but unfortunately the New Zealand exchange rate has also fallen substantially since then, offsetting some of the savings from lower international prices. In any case, the product cost makes up less than half the pump price," Mr Stockdale said.

In total, the New Zealand dollar has lost 17 cents against the United States dollar. According to AA PetrolWatch, petrol and diesel prices could be about 25 cents per litre cheaper if the exchange rate was still around 77 US cents.

Mr Stockdale said international prices have been falling due to a combination of declining global demand as a result of the previous high prices, and the financial crisis.

"So, subject to our exchange rate, it looks like the trend for lower prices will be with us for a while yet."

- NZPA