Inflation has slowed and shows few signs of ramping up anytime soon, which should ensure interest rates will stay on hold well into next year.
Consumer prices rose modestly in the first quarter driven by a sharp rise in cigarettes as the tobacco tax was raised, while rising world oil prices lifted petrol, which offset cheaper education because of the government's policy of no-fees for the first year of tertiary study.
The consumer price index rose 0.5 percent in the three months ended March, slightly above expectations, but the annual rate slowed to 1.1 percent from 1.6 percent , the lowest level since September 2016.
"The average price for packet of 25 cigarettes was $35.14 in March, compared with $31.68 last December," Stats NZ prices senior manager Paul Pascoe said.
There were more general price pressures for building and renting houses, although the growth in prices was slowing.
Core inflation, which leaves aside volatile items such as food, energy and fuel, showed price pressures to be muted.
Economists expect inflation to remain subdued for the foreseeable future, with little pressure on wages to rise.
"All up, the Q1 release suggests that the Reserve Bank will be comfortable leaving the official cash rate (OCR) on hold for some time yet," ASB chief economist Nick Tuffley said.
He said domestic inflation pressures would pick up pace at some stage, but not soon.
"But for now, the RBNZ has time on its side. We do not expect the RBNZ to raise the OCR until August 2019."
The new Governor of the Reserve Bank, Adrian Orr, said he expects inflation to remain "benign" for some time.
He told RNZ's Nine-to-Noon that central banks in developed economies were still coming to terms with low inflation, which has sent prices plummeting.
Mr Orr said even though inflation was currently low, the Reserve Bank was right to maintain its policy of keeping prices rises at around 2 percent a year to give certainty businesses and consumers.
"Everyone knows what we're trying to achieve, everyone knows our tools, everyone knows the uncertainties and we are doggedly determined to aim for 2 percent ... the 1 to 3 percent is an aspirational aim, it's a credible inflation target, 2 percent is the midpoint, we'll keep aiming to do that."
