Inflation in the three months ended September was more about specific price changes than the general inflation environment, Westpac chief economist Brendan O'Donovan says.
Statistics New Zealand will release the official inflation figures on Thursday.
The consumer price index (CPI) is expected to have risen 1% in September and annual inflation would fall to 1.4% from 1.9% in March.
Mr O'Donovan said that was a far cry from the 5.1% recorded a year ago.
The Reserve Bank has a policy target of keeping inflation between 1% and 3%.
Food, fuel and government charges would push up the quarterly CPI.
The usual lift in vegetable prices would see the food group make the strongest positive contribution to the third quarter CPI.
The transport group was expected to make a strong contribution, led by a 2% lift in petrol prices and an ACC levy increase on car registrations.
"Higher government charges will also boost the CPI elsewhere, including the annual increase in alcohol excise tax and local authority rates."
As a result, the alcohol and tobacco group and the housing group were expected to make a noticeable impact on the final results, he said.
The focus of the market would be on the non-tradeable and core inflation measures, as much as the headline results.
Westpac anticipated non-tradeable prices to post a 0.7% gain over the quarter, boosted by various annual government charges coming through at this time of the year.
However, annual non-tradeable inflation was expected to dip below 3% for the first time since early 2002, with the bank's 2.8% non-tradeable inflation forecast matching the Reserve Bank's view in its September monetary policy statement.
The biggest uncertainties were around airfares and the influence of the currency on domestic prices, Mr O'Donovan said.
Those uncertainties created risks on both sides of the quarterly 1% forecast.
"On balance, the upside risks feel a little larger than the downside risks.
This equates to some upside risk to the Reserve Bank's 0.9% forecast for quarterly headline inflation."
Mr O'Donovan was looking for "clear signs" of the lagged effects of the recession on domestic inflation.
He anticipated underlying inflation to continue easing as economic slack created by the five-quarter recession, and a strong appreciation of the New Zealand dollar over the past six months, took effect.
"This short-term outlook suggests no urgency to hike interest rates.
With the economy now in recovery mode and forward looking indicators sharply higher, we think rate hikes will be on the agenda around mid-2010, or a touch earlier, not later."
