Usually when you gain muscle you gain a bit of weight and lose inches - since muscle weighs more but is smaller than fat. Do you measure yourself or have someone else measure you? I'd also be interested to know where you are gaining inches. If it's in your middle section, it could just be bloating. OR (cause I've seen it happen) be sure that you aren't "sucking it in" when you measure! Sucking it in will give you inaccurate measurements every time. :)
I work part-time at Curves and it's important to not measure yourself too much because your body will fluctuate throughout the day & month. If you measure more than once a month maybe cut back to just once a month instead.