Inflation will be high in 2011 owing to the sanctions, which have caused shortages of basic goods, higher commodity prices and the unstable economic situation. The political crisis and violence following the election have reduced domestic food production, raising local prices, and we forecast inflation of 6% for the year. Inflation will ease in 2012 as global food and fuel prices fall back, but some price pressures will remain. Rises in domestic demand caused by an economic recovery, as well as higher public spending if aid flows are reinstated, will keep average inflation at 2.9% in 2012.