Consumer price inflation stood at 12.9% year on year in February-the 38th consecutive month (with one exception) in which prices have risen at double-digit rates. Inflation will remain elevated in coming months, as the floods destroyed an estimated 10-15% of farmland as well as grain-storage facilities, thereby generating supply-side pressures. More broadly, upside inflationary pressures abound; they include rising international commodity prices, the depreciation of the Pakistan rupee against the US dollar, the fuel-price rise announced in early March and the widening fiscal deficit, which has led to a resurgence in government borrowing from the central bank. However, the government's postponement of the introduction of the RGST will temper inflationary pressures somewhat. We forecast consumer price inflation at 10.2% in 2011, down from 13.9% in 2010. Inflation should then moderate, to average 6.9% in 2012-15.