Sluggish increases in food prices are being treated as a sign inflation will stay low

Stats NZ says prices climbed just 0.6 percent in the year to July.

ASB Senior Economist Mark Smith says that's lower than expected and comes alongside card spending slow downs, and price increases on other goods.

He says yesterday's OCR cut shows confidence from the Reserve Bank.

Smith says he's with the Reserve Bank on expecting inflation will drop below three percent in the September quarter.