More are travelling as the price drops

Petrol was another major downward contributor, with a 4 per cent decrease in price.

More realistic prices and a "do it while I can" attitude are prompting increasing numbers of Northlanders to head out and see the world, a travel agent said.

The latest consumers price index (CPI) showed a 3.5 per cent decrease in the price of holiday packages in the three months to December 2014, compared with the same quarter the previous year.

Petrol was another major downward contributor, with a 4 per cent decrease in price. Transport-related costs, most household contents and the cost of clothing and footwear also fell, despite a 0.8 per cent increase in CPI overall.

Small World Travel & Cruise Whangarei co-owner Sali Marinkovich said the cost of going on holiday had remained low in recent years.

"People who might have put off their holiday a year have instead been booking and going," she said.

"For some, that means going on holiday once or twice a year, instead of waiting two or three years to travel."

A large portion of people with the "do it while I can" attitude were those in their 50s and 60s who had time and money to travel, she said.

"We get a lot of baby boomers who think 'why not?' Some travel with partners, others travel with their families.

"We've had a quite an increase in higher priced bookings for bigger families that include grandparents, parents and kids."

The cruise market had become massive thanks in part to good deals with all inclusive prices, she said.

"We get more and more people going on cruises every year and once they've been on one, that's not it. They want to go again year after year and they tell all of their friends so they start going on them too."

Ms Marinkovich expected 2015 to be busier than last year as travellers wanted to go away for longer and be more adventurous.

The overall 0.8 CPI increase fell below the Reserve Bank's targeted 1-3 per cent band. According to Statistics New Zealand, flat prices in the previous quarter slowed the inflation rate.

Cigarettes and tobacco prices had the greatest yearly increase - up 11.9 per cent. The prices were affected by a 10 per cent tax increase in January, which brought the average price of a pack of 20 cigarettes to $17.20.

A further 10 per cent tax was added at the start of 2015, pushing the average price to about $20.

Other notable increases were the cost of newly built houses (up 5.4 per cent), rental properties (2.1 per cent) and electricity (3.6 per cent).

AMP Capital Investors senior portfolio manager Warren Potter said the falling oil price was expected to have more of an impact on petrol costs in the first three months of this year.