The cost of buying the goods and services producers use to supply their customers fell 1.0 percent in the three months ended in June compared to the previous quarter.
The drop in the producers' price index was mostly due to weaker dairy product manufacturing prices, and electricity and gas supply prices.
In turn, the prices producers charge their customers fell 0.5 percent in the June quarter.
Statistics New Zealand has also issued the latest capital goods price index for the June quarter, which measures a range of assets held by producers, such as buildings and machinery.
It rose 0.7 percent, due to higher prices for residental buildings.
Westpac senior economist Michael Gordon said the drop in prices related to dairying had been on the cards for a long time and was related to a switch-over to the new dairying season.
Mr Gordon said the capital goods price index was dominated by increases in construction costs.
"That's been coming through noticeably in housing construction but also it's increasingly coming through in commerical buildings as well. That's just really a product of the boom in construction, largely driven by Christchurch but it has been spreading elsewhere as well."