Inflation, as measured by the consumer price index (CPI), has decelerated rapidly from an average of 3.4% in 2009, turning briefly into deflation in August 2010, when the CPI declined by 0.1%. We forecast that, after a sharp fall in annual average inflation to an estimated 0.6% in 2010, owing to depressed domestic demand, average inflation will accelerate in 2011-12 as a result of stronger economic growth. However, a sluggish recovery in domestic demand in 2011 and lower international commodity prices in 2012 will keep the rise in the CPI in check, and we forecast that average inflation in 2011-12 will be around 2.5% per year.