Country Report Comoros June 2011

Outlook for 2011-12: Inflation

Comoros's membership of the Franc Zone will continue to have a restraining effect on inflation, as it limits the government's ability to print money and curtails the growth of the money supply. Nevertheless, inflation is expected to rise in 2011, underpinned by supply-side factors. Global oil prices are forecast to increase by 36% in 2011, offsetting the small decline in imported inflation as the euro (to which the Comorian franc is pegged) appreciates by 3% against the dollar. In 2010 inflation moderated to 2.7% despite a sharp rise in oil prices as international prices for the staple food, rice (which is almost entirely imported), fell by over 10%. In 2011 rice prices are expected to rise marginally and overall, inflation is forecast to increase to 3.8%. In 2012 inflation is projected to moderate to 2.3% as oil prices fall by 13%, and rice prices decline by 3.6%, offsetting the rise in imported inflation induced by a weaker euro.

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