A drop in fuel prices during the December quarter helped contain inflation to 3.4% for 2008.
The price of petrol during the December quarter fell 22.4% and that of diesel 26.9%, helping to push down transport prices by 7.6%.
According to Statistics New Zealand, the Consumer Price Index shows inflation for the quarter was 0.5% lower than for the previous three months.
Statistics New Zealand said that, had fuel prices remained unchanged from the September quarter, the index would have increased 0.9%.
During the December quarter, only the price of transport and communications fell, while nine other consumers price index groups rose.
The main increases were in food prices, which rose 1.5%, pushed up mainly by higher prices for meat, poultry and fish.
Housing and household utilities prices rose by 0.6% because of higher electricity prices.
Prices for recreational and cultural-related activities rose 1.5% as a result of higher prices for overseas package holidays.
During 2008, the price of food went up 9.4%, petrol fell 4.8% and the price of electricity rose 7.7%.
The rate of inflation for the 12 monts to September 2008 was 5.1%.
ANZ National Bank chief economist Cameron Bagrie said a lower inflation rate should prompt the Reserve Bank to drop the Official Cash Rate by one percentage point at its next review on 29 January.
Mr Bagrie said banks have been cutting fixed-mortgage rates in anticipation of the move, and if the Reserve Bank indicates it will continue cutting the Official Cash Rate, the fixed-mortgage rates could fall further.
UBS investment bank senior economist Robin Clements doubts the figures will affect the Reserve Bank's intentions because the data is close to that forecast by the bank.
Despite the decline in fuel prices in the December quarter, four petrol companies increased their petrol prices by five cents a litre on Tuesday.
Mobil, BP, Shell and Caltex raised the price of 91 octane to $1.48 cents and 96 octane to $1.53.
Caltex spokesperson Sharon Buckland blamed the exchange rate for the increase.
Diesel prices have not changed.
The Road Transport Forum says transport charges are unlikely to drop despite the fall in fuel prices in the final quarter of 2008.
Chief executive Tony Friedlander says he cannot see costs falling for clients yet because fuel costs represent only 15% of a truck driver's costs.