However, while specials on grocery items drove food prices down in December, the higher prices paid for dairy, fruit and vegetables during the year meant consumers faced 2.3% higher food prices than they did the previous December.
Restaurant meals and takeaways prices rose 2.5% over the year to December.
Butter prices fell by 5% for December. By late last year they had risen more than 60% during the previous 12 months, while avocado prices were almost twice as expensive as a year ago.
Statistics New Zealand prices manager Matthew Haigh said butter, chocolate bars and wholemeal bread prices all fell in December, while tomatoes and nectarines were also cheaper.
Following four successive monthly rises, butter prices dropped 4.9% in December to an average $5.46 for the cheapest available 500g block.
``Butter prices had been falling at international dairy auctions since October,'' Mr Haigh said in a statement.
Total food prices were down 0.8% in December as all store-bought food groups fell during the month, while grocery food and seasonally cheaper fruit and vegetables were the main factors contributing to the month-on-month dip in food costs, he said.
Fruit and vegetable prices fell 1.7% for December, led by seasonally lower prices for tomatoes and nectarines.
However, Mr Haigh said despite the monthly fall, fruit and vegetable prices were still 4.5% higher than a year ago, due to a 231% increase in pumpkin prices and an 88% increase in the price of avocados.
``Avocados are usually at their cheapest this time of year, but prices are still relatively high this December.''
A 200g avocado had an average price of $2.31 in December 2017, compared with $1.23 the previous year.
Mr Haigh said while food items generally rose in price over time, breads and cereals were continuing a downward trend that began in early 2013. Prices had fallen 1.1% each year.
A 700g loaf of grain bread had an average price of $3.10 in December 2017, compared with $3.75 in January 2013.
``Global wheat prices have been declining since late 2012, and from 2014 we saw a number of retailers holding their prices for cheapest available white bread fixed at $1,'' Mr Haigh said.
