The annual inflation rate has slipped from a six-year high of 2.2% in the previous quarter to 1.7%. The Reserve Bank's preference is 2%.
The Reserve Bank's annual inflation target range is between 1% and 3%.
The result was ''substantially below'' the Reserve Bank's 0.3% movement expectations, Westpac acting chief economist Michael Gordon said.
''While the Reserve Bank has already been on the side of arguing that official cash rate (OCR) hikes are a long way off, the [flat] result should put a severe dent in market expectations that the Reserve Bank will be hiking rates by mid-2018,'' Mr Gordon said.
Statistics New Zealand prices senior manager Jason Attewell said
household basics such as rent, food and electricity ''all hit consumers' pockets harder this quarter''.
''Offsetting those price rises were falls in domestic airfares and petrol prices, which fell on average by 4c a litre,'' Mr Attewell said.
ASB chief economist Nick Tuffley much of the weakness was attributable to declines in the price of fuel, which had heightened the volatility of the consumer price index recently.
''Both ourselves and the Reserve Bank view domestic capacity pressures as a key source of inflationary pressures over the coming years,'' Mr Tuffley said.
He continued to expect the Reserve Bank would not lift the OCR until late 2018, with yesterday's inflation data meaning there was ''no hurry'' to act any earlier, noting there is a monetary policy statement due in August.
''The Reserve Bank will remain very comfortable with its recent stance of holding the OCR down for a considerable period,'' Mr Tuffley said.
He did not believe yesterday's data would change the Reserve Bank's inflation outlook but close attention would be paid to how domestic inflation pressures tracked in coming quarters.
Mr Attewell said housing-related prices continued to increase. Prices in the category were up 0.8% in the June quarter, and were up to 3.1% annually.
Prices for newly built houses, excluding land, rose 1.8% for the quarter, Auckland having the largest increase, up 3%, followed by Canterbury up 0.8%, and Wellington up 0.5%.
Housing rentals rose slightly, up 0.4%, held down by a 1.6% fall for Canterbury.
