SYDNEY, Jan 31 (Reuters) - New Zealand's business confidence rose in January with inflation expectations taking a step lower, but the proportion of firms planning to raise their prices remained stubbornly high, an ANZ Bank survey showed on Wednesday.

The survey's headline measure showed a net 36.6% of respondents expected the economy to improve over the year ahead, versus a 33.2% optimism level in the previous poll in December.

A net 25.6% of respondents expected their own businesses to grow in the next 12 months, versus 29.3% last month.

"Overall, businesses expect the worst is past," ANZ Chief Economist Sharon Zollner said in a statement. "Although the medicine has been bitter, it's working. We just need those pricing intentions to start playing ball to steer clear of another dose of monetary tightening." (Reporting by Renju Jose in Sydney; Editing by Jacqueline Wong)