Falling grocery prices and lower prices for restaurant and takeaway foods helped keep food-price inflation subdued in August.
Statistics New Zealand figures showed the food price index rose only 0.1% in August and was down 1.3% on year-ago levels.
ASB economist Jane Turner said the decline in grocery prices had been largely influenced by falling dairy prices.
"This reflects the lagged impact of lower global dairy prices on commodity markets, with dairy prices falling from very elevated levels."
More recently, dairy prices had stabilised on commodity markets and were likely to pick up in the coming 18 months, as higher feed prices constrained global dairy supply growth, she said.
Further falls in grocery prices were likely to be limited.
"We are likely to see the flow-on impact of higher global food prices over the coming year resulting from the United States drought and reduced crop supply."
Meat prices remained flat in August and could come under further pressure in coming months. That also reflected the delayed impact of lower meat export prices, Ms Turner said.
Like dairy prices, meat prices had started to stabilise on commodity markets and were also likely to increase in the coming 18 months.
Restaurant and takeaway prices were largely influenced by labour costs. Prices in that category had been "very subdued", rising just 1.3% over the past year. The subdued pace of growth reflected the relatively weak labour market and low wage inflation, she said.
