We estimate that annual average inflation rose in 2010 owing to higher oil and non-oil commodity prices and a fall in agricultural output, which increased the cost of wheat imports. Oil prices are forecast to remain high in 2011, averaging US$90/barrel (although prices may rise further over fears of contagion of unrest to oil-exporting countries). Inflation is expected to rise further to an average of 4.9% in 2011 as the prices of basic food items and of oil increase. A relatively tight monetary policy will ensure that inflation remains manageable during the forecast period, at an average of 4.2%. Average inflation fell to 3.2% year on year in February. The explanation for this surprisingly low figure is that upward pressure on prices from supply-chain bottlenecks (arising from work stoppages) and from higher global commodity prices has been offset by reduced domestic demand.