Tobacco tax increases are likely to have pushed inflation above the Reserve Bank's forecast for the three months ended March, economists say.
The March quarter Consumer Price Index, the official measure of inflation, will be released on Wednesday morning.
ASB senior economist Jane Turner expected the quarterly inflation to rise by 0.6%, to take the annual rate to 1.1% from 0.9% in December.
The Reserve Bank in March forecast inflation to rise by 0.4% in the quarter.
One of the variables would be how the food price index affected inflation.
In March, New Zealand food prices recorded their biggest drop since October 2011, led by falls in prices of apples, tomatoes, kumara, mandarins and chocolate bars.
Ms Turner said that without the food price index fall, inflation would have risen 0.7% in the March quarter.
Prices fell 1.3% in March from February and declined 0.4% from March 2012, according to Statistics New Zealand. The monthly decline was the biggest in 17 months.
Food prices make up about 19% of the consumer price index. Prices of fruit and vegetables declined 6.5% in March but gained 3.8% in the year. Grocery prices declined 0.8% in the month and fell 2.6% in the year.
Meat, poultry and fish prices fell 0.9% in March from February and were down 0.4% for the same months of 2012. Non-alcoholic drinks fell 0.8% in the month and 0.5% in the year while restaurant and ready-to-eat meals rose 0.2% in the month and 1.1% in the year.
Ms Turner said much of the lift in inflation would be attributed to the 10.9% increase in tobacco excise duty on January 1. In addition, prescription charges on fully subsidised pharmaceutical products increased on January 1 to $5 from $3 per script, which would increase health prices.
Grocery prices were expected to increase in the coming year, reflecting increased export prices for dairy gradually flowing through to the retail level. Meat prices were likely to temporarily fall in the second quarter as farmers brought forward livestock slaughter as the drought intensified, she said.
Housing and household utilities would continue to be a source of increased inflation, reflecting the continued lift in Canterbury construction costs as the rebuild placed further strain on resources.
''Over time, the increase in construction costs may start to spill over to the rest of the country. But for now, the spill-over appeared to remain reasonably strong.''
The first quarter was also a seasonally strong quarter for rental increases and ongoing supply shortages in Canterbury and Auckland were likely to place upward pressure on rental growth, Ms Turner said.
The high value of the New Zealand dollar gave scope for some large discounts in household contents and recreational equipment in December. The March quarter could have allowed retailers to recoup some of their margins, limiting the extent of further price falls, she said.
At a glance
The consumer price index measures the weighted average price change of a fixed basket of goods and services which represent the average expenditure pattern of New Zealand households.
