We estimate that consumer price inflation averaged 3.4% in 2010. Oman imports the majority of its food products. We have revised up our forecast for inflation in 2011 to 4.4% owing to an expansionary fiscal policy and a rise in the prices of basic food items, such as wheat, and industrial raw materials. Inflation is forecast to fall to 3.9% in 2012 as prices stabilise. Inflation in the forecast period is expected to be much lower than in 2007-08, when it averaged 9.2%. However, it remains high by Omani standards. Consumer prices are constrained by the government's extensive subsidy system, which holds in check the prices of a range of core goods and services.