Consumer price inflation ended 2010 at 2.8%, enabling the central bank to meet its 1-3% target for the first time in five years. However, a sustained increase in housing prices, which have an impact on the consumer price index (CPI) via the rental component of the index, is a continuing cause for concern. Following a recent re-weighting of the index, housing will have an even bigger influence on the CPI from henceforth (accounting for nearly one-quarter of the index). Imported inflation is also on the rise, on the back of sharply higher oil and non-oil commodity prices. Against this backdrop, we expect inflation to breach the 3% upper limit of the target range for much of 2011, averaging 3.4% for the year as whole. After a forecast dip in price growth in 2012-helped by a renewed moderation in global commodity prices-accelerating economic growth and increasing capacity constraints will push inflation back towards the top of the target range in 2013-15.