Higher prices at the petrol pump and the greengrocers have pushed the inflation rate up for the three months to September.
Food was the main group putting pressure on the inflation rate during the quarter, while petrol prices were also a significant contributor.
Official figures show the Consumer Price Index, which is a key measure of the cost of living, rose to 0.9% in the September quarter.
Petrol rose 5.6%, making up more than half the quarterly rise.
Vegetable prices had a seasonal rise of 20% but Statistics New Zealand says that often happens in the September quarter.
If the increases in petrol and vegetable prices were excluded the index would have risen 0.3%.
Annually, the index rose 1.4%, which puts it at the bottom of the Reserve Bank's inflation target range of 1 - 3%.
The New Zealand dollar jumped on the news, rising 0.25 US cents and was trading at 83.95 US cents at midday on Wednesday.
Westpac chief economist Dominick Stephens says the data was slightly stronger than what it and the Reserve Bank had been expecting.
He says inflation has returned to the central bank's target band for the first time since June 2012, which is a very important threshold.
Mr Stephens says that will embolden the Reserve Bank to talk about raising interest rates.
He says just beneath the surface of the figures there is a building momentum to construction cost inflation.
"The Canterbury rebuild's really getting quite a head of steam now, we're seeing the construction sector ramp up elsewhere in New Zealand. Basically prices in that area are just starting to lift," says Mr Stephens.
