Deutsche Bank chief economist Darren Gibbs expects inflation during the first quarter will be at least 1%, driven by rises in fuel prices, GST and ACC levies.
The Consumer Price Index for the first quarter of 2011 is due to be issued on Monday morning.
Mr Gibbs expects inflation will be up 1.1% for the quarter, bringing annual inflation to 4.7%.
He says around half that increase will be petrol, 0.2% of the increase will be food, while 0.2% will be the tabacco tax.
Mr Gibbs says 0.9% of the 1.1% increase reflects international commodity prices and the increase in indirect taxes.
He says it's nothing to do with the strength of the economy which is still subdued.
Mr Gibbs says he believes the Reserve Bank will leave the Official Cash Rate on hold for the better part of this year.
He says the key questions are how quickly the economy recovers and what people think about inflation going forward.
Mr Gibbs says the earliest the Reserve Bank is likely to increase rates at this stage is December, but there would need to be a more positive economic picture.
He says it would require things such as the Christchurch rebuild to get underway and farmers to spend their increased incomes, as well as direct pressures on inflation.
Mr Gibbs says if that doesn't happen then, interest rates are likely to remain the same until about March next year.
Finance Minister Bill English says he is confident that inflation will return to the target band of 1 to 3 percent over the next year.
Mr English told Reuters that the GST increase has created the perception of higher inflation.
But he says over the longer term inflation is well under control, and in 12 months should be in the range of 2% - 2.5%.