Opinions differ as to whether the current low inflation rate arrives as a blessing or a curse.
Finance Minister Bill English says low inflation is assisting households to get ahead, with wages rising faster than the cost of living, while the Council of Trade Unions says rising household and food costs negate any gains from low inflation.
Both raise the prospect of low pay rises while inflation remains low.
The consumer price index (CPI), which measures inflation, fell for the quarter to December by 0.2%, with annual inflation for 2014 coming in at 0.8%, below most analysts' expectations and below the Reserve Bank's preferred, targeted range of 1%-3%.
Mr English said the Government's commitment to fiscal restraint and economic reform had played a part in reducing inflation pressures.
''This is allowing interest rates to stay lower for longer, which is enabling more household savings, and creating better conditions for investment and exports,'' Mr English said in a statement yesterday.
The current economic conditions, with stable growth, low inflation, more jobs and low interest rates, were helping New Zealanders to get ahead.
''Households with mortgages have the double benefit of low cost-of-living rises and lower mortgage-servicing costs, which will be particularly welcome in regions with increasing house prices,'' he said.
Mr English warned that low inflation rates also meant ''implications for wage increases'' and the dollar value of future wage increases might be smaller than previously expected.
''This is particularly true in the public sector. Lower inflation means the Government will have to work even harder to control its spending to get its books back in surplus, so public sector wage rises will remain restrained,'' he said in a statement.
CTU economist Bill Rosenberg said despite the inflation decline, rising housing costs were still a big worry for households.
The 0.2% fall was not unusual, because of seasonally falling food prices.
''This time it is being helped by falling petrol prices, but was held back by rising housing costs and seasonal food prices not falling as fast as usual,'' Mr Rosenberg said in a statement yesterday.
Inflation for the year would have been -0.1%, instead of 0.8%, if not for rising housing and energy costs.
Those costs did not include rises in mortgage interest rates during the year, nor the rising house prices faced by first-home buyers of existing homes.
Accounting for 24% of the expenses of an average household, housing costs were unavoidable and a big drain on incomes, Mr Rosenberg said.
He said the current low consumer price rises were not a reason for low wage increases.
''People are due a catch-up in a growing economy where real wages have not grown as fast as the economy can afford,'' he said.
