Country Report Afghanistan January 2011

Outlook for 2011-12: Inflation

The rate of inflation peaked at 43% year on year in May 2008, according to IMF data, stoked by surging global food and fuel prices. Good domestic harvests caused prices to drop rapidly in 2009, but inflation picked up steadily in 2010. Price levels began to rise again in June 2010 after 14 consecutive months of year-on-year falls. Consumer price inflation rose to 7.5% year on year in October 2010 from 5.3% in September and -14.1% in October 2009. The rate of inflation is likely to remain above 5% in the medium term, owing to rapid economic growth and supply constraints.

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