Meat prices also fell, making up for stronger fruit and vegetable prices.
The food price index fell 0.5% in August from July, following two months of gains, Statistics New Zealand said.
The decline was 0.4% on a seasonally adjusted basis. Prices were up 0.4% compared with August last year.
Grocery prices fell 1.8% in August, following a 0.1% decline in July, reflecting a 7.7% decline in the price of cheese, a 13% drop in butter prices and a 0.6% fall in the price of fresh milk, the government statistician said. The decline for cheese was influenced by discounting, while prices rose for chocolate and bread.
Meat, poultry and fish prices also fell 1.8%, led by a 3.6% decline for chicken, a 2% decline for processed meat and a 2.4% decline for beef. Fruit and vegetable prices rose 3.1% in August, led by a 4.6% gain for vegetables, although that reverses to a 0.4% decline when seasonally adjusted.
The price of bananas rose 8.9%, reflecting a supply shortage late in the month.
