Removal of the carbon tax has dampened inflation, allowing the Reserve Bank to remain in wait-and-see mode on interest rates.
The TD Securities/Melbourne Institute monthly inflation gauge rose by 0.1 per cent in September, following two months of flat results.
The gauge increased by 2.2 per cent in the year to September, at the bottom of the Reserve Bank's two-to-three per cent target range.
Price rises for fruit and vegetables, tobacco and holiday travel in the month were offset by falls in prices for health, petrol and clothing and footwear, the report said.
TD Securities is forecasting benign inflation when the Australian Bureau of Statistics releases the September quarter consumer price index on October 22.
Headline inflation is expected to increase by 0.4 per cent for the quarter and 2.2 per cent for the year, while underlying inflation is expected to increase by 0.5 per cent in the quarter for an annual rate of 2.6 per cent.
"We expect underlying inflation to remain at the mid-point of the RBA's two-to-three per cent target band over the next year while the impact of the carbon tax removal temporarily dampens prices," TD Securities head of Asia-Pacific research Annette Beacher said.
"However, the recent slump in the exchange rate brings fresh upside to the outlook for 2015."
Ms Beacher said Tuesday's RBA board meeting would be keenly watched, to see whether the board still considers the exchange rate to be at a historically high level, given its sharp decline in September.
"Otherwise, expect the RBA to repeat that `a period of stability in interest rates' is the mantra for now," Ms Beacher said.
The Australian dollar has taken a dramatic fall in the past month, falling from 94 US cents to an eight-month low of 86.64 US cents.
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