The fall in food prices was driven by an 8.6% decline in the price of fruit and vegetables, the largest recorded monthly decline since the series began in June 1999.
Fruit and vegetable prices tend to be volatile from month to month, reflecting the effects of weather on crop yields.
ASB economist Christina Leung said the fall in September followed some strong increases earlier in the year.
"Nonetheless, the decline in grocery food prices points to some moderation in underlying food price inflation."
The fall was largely due to sharp drops in the price of lettuce and tomatoes, reflecting favourable growing conditions.
Meat prices increased 0.3% in the month, despite a fall in the price of lamb and beef.
Ms Leung said lamb and beef prices had generally held up in international markets in recent months, but the flow-through effect on prices at the retail level in New Zealand appeared muted.
Prices in the restaurants and takeaways sub-group rose 0.2%.
Given labour costs make up a large proportion of the input cost in that category, and wage growth had been recovering in recent months, Ms Leung expected further modest increases in this category during the next 12 months. Overall, the fall in food prices gave the Reserve Bank some breathing space on inflation, she said.
"With the volatility in global market dominating the Reserve Bank's attention for now, we continue to expect the bank to leave the official cash rate on hold until March next year."
