An expected 0.9% annual rate of inflation would take it below the Reserve Bank's policy target it has with the Government of keeping inflation between 1% and 3%.
Statistics New Zealand will release the latest consumer price index (CPI), the official measure of inflation, tomorrow.
ASB chief economist Nick Tuffley said the key development over the December quarter had been the sharp drop in global crude oil prices which had driven the price of petrol lower.
New Zealand petrol prices had fallen from more than $2.20 a litre at the beginning of October to below $1.80 by mid-January.
He estimated the fall in fuel prices meant a 0.3% reduction in the CPI for the fourth quarter, and a bigger reduction in store for the three months ended March this year.
''We assume crude prices will remain low over much of 2015, which results in a low headline inflation outlook for 2015.
''We now expect headline inflation will remain below the Reserve Bank's target over much of 2015.''
Besides lower petrol prices, a seasonal fall in food prices also made a substantial negative contribution to inflation in the December quarter, Mr Tuffley said.
Fruit and vegetable prices typically eased in spring months from their winter highs as favourable weather conditions improved crop yields.
In contrast, tight global beef supply had boosted beef prices. Overall, food price inflation remained benign, he said.
Westpac chief economist Dominick Stephens also expected annual inflation to fall below 1% for the year, the second time in the past few years.
Soft overseas inflation, a strong New Zealand dollar and moderate, but not spectacular, economic growth had continued to keep inflation in check.
Mr Stephens believed plunging oil prices would help cement low inflation but would only play a small part in tomorrow's figures.
Quarterly movements in the CPI tended to be dominated by seasonal factors.
More often than not, it registered a small drop in the December quarter as fresh produce prices receded from their winter peaks.
''Our forecasts of a flat outturn would actually be one of the higher December quarter readings in recent years and largely reflects food prices rose less than usual last winter and didn't have as far to fall over spring and summer.
''The real fireworks will come in the March quarter.
''Based on current fuel prices, annual inflation could come very close to zero in the early part of the year,'' he said.
The biggest uncertainty around the Westpac forecast was air fares and package holidays.
There was an unusually large seasonal increase in December 2013 and Westpac economists were assuming it was not repeated to the same degree in 2014, Mr Stephens said.
At a glance
• Annual inflation forecast at 0.9%.
• December quarter inflation forecast at 0%.
• Annual inflation could fall to 0% by March.
• Lower oil and food prices play their part.
