Inflation-as measured by the revamped consumer price index (CPI)-surged to 4.5% year on year in December and 5.4% in January 2011 (from a recent low of 3.2% in October) owing to rising food and fuel prices. Inflation was subdued throughout most of 2010 as better rainfall kept food and electricity prices in check and because of deep cuts in telecoms tariffs, but these dampening factors will fade. The new CPI, introduced in February 2010, gives a more accurate measure of inflation by increasing the number of items in the price basket and using new weightings based on the latest household spending data-while the cut in the weighting for food, from 50% to 36%, will tend to reduce price volatility in future. However, food prices climbed by 8.6% in January, driven by global trends and dry weather locally, while transport costs rose by 8.4% in line with fuel prices, signalling higher inflation ahead. After averaging 4% in 2010, inflation will climb to 5.8% in 2011 as demand growth quickens and food and fuel prices rise. We expect inflation to move within a 5.5-6% range in 2012-15, spurred by faster GDP growth, higher electricity prices and wage increases, although the revision of the CPI, prudent monetary policies, efficiency gains and more stable global commodity prices will help to keep inflation within tolerable bounds. The weather-and, hence, farm production-will remain a key variable.