Country Report Togo April 2011

Outlook for 2011-12: Inflation

Inflation declined to 1.4% in 2010, helped by plentiful, cheaper food following favourable rains; food accounts for 29% of Togo's price basket. Inflation, however, is expected to rise again in 2011, to 3.2%, driven by higher world oil and food prices and the depreciation of the CFA franc, which will push up import costs. Rising domestic demand associated with faster GDP growth and higher electricity tariffs will also put pressure on prices. Inflation is forecast to drop back to 2.5% in 2012, helped by lower world oil and food prices as well as efficiency gains arising from structural reforms, although inflation will be higher in both forecast years if the harvest is poor.

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