Prices in the ANZ Monthly Inflation Gauge fell 0.1% in May following a 0.2% fall in April, the first time there had been two consecutive falls.
The Reserve Bank this morning will announce whether it sees enough reasons in the economy to cut the official cash rate from its current 3.5%.
Economists are giving the chances of a rate cut today a 50:50 chance.
In the ANZ gauge, prices fell in four groups, rose in one and were unchanged in the remaining three.
ANZ chief economist Cameron Bagrie said falls for accommodation services were partly seasonal, underpinning lower recreation and culture group prices, despite higher gym fees.
Falls for vehicle insurance and accountancy services contributed to a fall in miscellaneous goods and services prices, while low rail transport fares pushed down transport prices.
Increased internet fees pushed up communications group prices.
Housing group prices were unchanged. Rising electricity and construction costs were offset by a further fall in rents, he said.
Nationwide rents from the tenancy bond data rose in May but the rental component was based on a three-month average. The trajectory of price rises was also slowing, Mr Bagrie said.
Plugging in a 0.2% rise for June, the average June result for the past two years, would deliver just a 0.1% second quarter rise in the gauge and a flat quarterly result for the ex-housing underlying gauge. Both were well below the Reserve Bank's pick of 0.5%.
''There's a clear trend in our ex-housing gauge: it's down. We can postulate on a number of levels as to why this might be. Theories abound and they are not much more than that. But data is speaking for itself.''
The OCR should be lower, he said. The Reserve Bank had an inflation target, not a growth or a housing one.
The three were interconnected and asset prices were now a consideration in setting the OCR but one dominated, he said. One policy instrument, the OCR, equalled one target, inflation.
The New Zealand Institute of Economic Research's monetary policy shadow board is divided on whether the Reserve Bank should cut the OCR today.
''The outlook for economic growth no longer looks quite so robust. Dairy prices continue to slide, driving down demand in much of rural New Zealand. Inflation is at zero, so there is plenty of reason to cut the rate,'' institute principal economist Kirdan Lees said.
The shadow board suggested if an OCR cut was not made today, such a move was not far away.
