Sydney  - Food has become dearer for New Zealanders even as the annual inflation rate declined to 3 per cent in the quarter ending March, official figures released Friday said.

Falling petrol prices in the fourth quarter had helped bring New Zealand's inflation rate down from an 18-year high of 5.1 per cent to an annual rate of 3.4 per cent last year.

The consumers price index (CPI) increased 0.3 per cent in the first quarter of 2009. Higher prices for food and cigarettes were largely offset by lower prices for transport, Statistics New Zealand said.

A rise in food prices of 1.2 per cent, driven by higher prices for groceries, was a key factor in the increase for the March quarter, as was a significant increase of 1.8 per cent in prices for alcoholic beverages and tobacco.

While prices for new housing remained constant, the transport group made the most significant downward contribution to the CPI, with prices for transportation falling 1.5 per cent overall, driven by lower prices for international air transport, which were down 16.5 per cent, diesel prices falling 19.2 per cent, and petrol, down 1 per cent.

In the last 12 months leading up to March 31, food prices rose 8.8 per cent, electricity was up 7.5 per cent and housing and household utilities were up 3.6 per cent. (dpa)