We estimate that inflation averaged 2.5% in 2010 given that Libya's consumer price index rose by 2.9% in the year to November 2010. Inflation is forecast to rise to an average of at least 6.8% in 2011. This estimate is based on the assumption that Libya, which imports 75% of its food, will face significant shortages owing to the ongoing conflict. In addition, higher international food and non-oil commodity prices will increase the cost of imports. Upward inflationary pressure may be mitigated by a shortage of local and foreign currency. However, it is possible that the Qadhafi regime could secure funds by liquidating direct investments by Libyans in foreign assets, particularly in Sub-Saharan Africa. In the medium term, inflation will be sustained, however, by a revival in consumer confidence and higher oil revenue leading to greater domestic liquidity. It is likely that government subsidies under any future regime will be maintained, which will ensure that prices for many staple goods, particularly housing and healthcare, are kept in check.