The prices paid at the farm and factory gate for goods and services has fallen, with producers' input costs down 1.1% in the September quarter.
Output prices fell 1.4%, driven by weaker dairy and electricity prices.
Westpac Bank's senior economist, Doug Steel, says this is the result of weak demand and a high New Zealand dollar.
"The recession that we have had has meant that prices - both on the input and output sides - have been falling. Demand has been weak, and that's coming through in lower prices."
"Since the beginning of the year we've seen a strong appreciation of the New Zealand dollar - that tends to dampen export prices, and that's certainly flowing through the economy."
The dairy product manufacturing index has fallen nearly 21% - the largest quarterly fall in seven years, while the dairy cattle farming index has fallen more than 24% - the biggest drop since records began.
Separately, the capital goods price index has fallen 0.4% in the September quarter.
Cynotech shares rise
Shares in Cynotech Holdings have risen by a third after its major owner, Alan Hawkins, signalled he intends making a full takeover offer for the finance company.
Its shares rose 3.5c to 14.5c, valuing the company at nearly $18m.
Mr Hawkins' investment concern, Cynotech Securities, says investors will get more details about the offer on or about 10 December.
New Zealand market up slightly
The benchmark NZX50 index rose 16 points, or 0.5%, to 3174 on turnover of $89 million.
Fletcher Building was unchanged at $8, Telecom unchanged at $2.56, Contact Energy up 16 cents to $6.16.
Sky City Enertainment Group was up 10c to $3.45.
Air New Zealand was up 2c to $1.35.
AMP was up 13c to $8.05.
The Warehouse was up 7c to $4.18.
On the currency markets, at 5.12pm the NZ dollar was at 74.31 US, 79.54 Australian, 44.46 pence, 66.53 yen, 0.4964 euro.
The Trade Weighted Index was 66.07.
Australia closes higher on gold gains
The Australian share market closed just over 1% higher after gains in the resources sector, especially gold stocks.
Total volumes were thin ahead of key US retail sales figures on Monday night.
The benchmark S&P/ASX200 index was up 48.8 points, or 1.04%, at 4755.2 points, while the broader All Ordinaries index gained 51.2 points, or 1.08%, to 4773.8 points.
On the Sydney Futures Exchange at 1624 AEDT, the December share price index contract was 43 points higher at 4,769 on volume of 19,308 contracts.
National Australia Bank was down 39c at $28.50, Westpac dropped 53c to $25.29, Commonwealth Bank was 37c weaker at $53.96 and ANZ eased 30c to $22.18.
Gold stocks were stronger after the precious metal's price hit fresh highs.
Japan closed mixed
Tokyo share prices ended mixed on Monday as investors stayed cautious despite news that Japan's economy grew at the fastest pace in more than two years in the latest quarter.
The benchmark Nikkei-225 index edged up 20.87 points, or 0.21%, to 9,791.18. The broader Topix index of all first-section shares slipped 6.38 points, or 0.74%, to 860.42.
Shortly before the start of trade, the government reported that Japan's economy grew at a 1.2% quarter-on-quarter pace in July-September -- about twice as fast as expected.
Oil prices up
Oil prices rose above $77 a barrel on Monday in Asia amid a weaker US dollar and an improving global crude demand outlook next year.
Benchmark crude for December delivery was up 86c to $US77.21 a barrel at midday on Monday Singapore time in electronic trading on the New York Mercantile Exchange.