After averaging 8.1% last year, the lowest rate since 2004, price increases will accelerate in 2011 on the back of rising global food and fuel prices, as well as the 16.7% currency devaluation in September 2010. The inflation rate quickened to 29.6% in April and government-imposed price ceilings on some goods have not been successful. The government introduced price ceilings on 20 basic goods in January in order to dampen inflation, but the impact of this policy will be muted because of a lack of implementation and subsequent shortages as traders stop importing goods for sale at the unprofitable lower prices. International price rises for oil and food and continued inefficiencies in supply chains from ports in Djibouti, Kenya and Sudan will add to price pressures. We forecast that inflation will average 22.7% in 2011 and that structural constraints will keep it high, at around 11%, in 2012.