BNZ economist Doug Steel is picking annual inflation will have reached its low point in the three months to September and will start to rise as more construction activity gets underway in Christchurch and Auckland.
The Consumer Price Index, which measures the change in prices for goods and services purchased by households, is due on Tuesday, for the three months to September.
Mr Steel expects the index will lift 0.4% in the third quarter, bringing annual inflation to 0.9%.
"Obviously 0.9% will be below the strict 1% - 3% target for the Reserve Bank, but we think this will be the low point."
Mr Steel said the strong kiwi dollar has been pushing down tradable prices, particularly on the imported goods side, but unless the New Zealand dollar keeps increasing that influence will fade over the coming 12 months.
He predicts that inflation in the next quarter will bounce back to around 1.6% and will reach about 2% in 2013.