Improved agricultural production in Chad should exert downward pressure on food prices in 2011-12, although we now expect global food prices to rise by a rapid 27% in 2011, so imports will become dearer (before dropping in price in 2012). However, the government is expected to shield consumers from the full effect of price rises through subsidies on staple foods. General imported inflation should accelerate in 2011-12, as the local currency is expected to weaken in line with the euro, to which it is pegged. Public works spending by the government will be high, in view of the draft 2011 budget. Consequently, the inflationary impact of this spending on higher household earnings and increased demand will be significant. In 2011 inflation will also be boosted by the low base of comparison in 2010, when prices are now estimated to have declined on average by 1%. Given these trends, average annual inflation is now forecast at 8% in 2011 (previously 5%) and 2% in 2012 (previously 4%), when global commodity prices are expected to ease.