The below-expected result will raise hopes that the Reserve Bank (RBNZ) can now wrap its run of interest rate hikes, and begin thinking about downwards move.
The post-COVID inflation surge has prompted the RBNZ to raise the official cash rate from 0.25 per cent to 5.5 per cent.
Governor Adrian Orr has held that figure at the past three meetings, in part as the central bank waits on fresh inflation data.
The consumers price index (CPI) headline figure has fallen from a peak of 7.3 per cent in the 12 months to June 2022 to 6.0 per cent three months ago, and now to 5.6 per cent.
"We believe today's numbers significantly reduce the likelihood of any further hikes from the RBNZ," Kiwibank chief economist Jarrod Kerr told the NZ Herald.
The RBNZ monetary policy committee next meets to consider the Official Cash Rate on November 29.
The 5.6 per cent result is below banking forecasts - several of whom tipped a narrow rise - Â and the RBNZ's forecast of 6.0 per cent.
Treasury correctly forecast the 5.6 per cent result.
Stats NZ spokeswoman Nicola Growden said it was important Kiwis understood a lower inflation figure did not mean cheaper prices were on the way.
"Prices are still increasing, but are increasing at rates lower than we have seen in the previous few quarters," she said.
Food was the largest contributor to inflation in the 12 months to September, including large growth from ready-to-eat food, milk, cheese, eggs, bread and cereals, which all went up more than nine per cent.
Stats NZ said the next biggest driver of inflation was housing and household utilities, amid rising construction prices and rents.
Outgoing prime minister Chris Hipkins said the figure showed his government - which lost Saturday's election - was making progress on slaying the inflation dragon.
"Good news for the economy, (it) shows that we leave the government's economic position in an improving position," he said.
Cost of living and high inflation was the number one issue of New Zealanders in the election.
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