KEY POINTS:
Economists expect inflation data due on Wednesday to show virtually flat or even negative growth in the consumer price index in the December quarter.
Falling petrol prices had helped to lower "an otherwise solid quarter of price rises in the December quarter", said the ASB bank, which is forecasting an index rise of 0.1 per cent.
"These headline numbers mask still persistent inflation pressures," ASB economist Daniel Wills said.
The Reserve Bank is watching the index, otherwise known as the CPI, for signs inflation is coming off the boil.
Inflation has been running above the bank's 1-3 per cent target band for the last five quarters, and is now around 3.5 per cent a year.
Market expectations for Wednesday's figure range between a 0.1 per cent rise and a 0.2 per cent fall. Even the Reserve Bank expects negative inflation - a 0.1 per cent fall - but whether it will take the heat out of the medium-term inflation rate is less certain.
Inflation has not been negative since the March quarter of 2001.
Wills says inflation is proving more persistent than expected.
"Indeed, domestically generated inflation pressure - more closely associated with medium term inflation - has remained above 4 per cent per annum for several years. And this quarter will be no exception."
