The average annual rate of inflation is estimated at 7.5% in 2007, as drought and high international oil prices have driven food prices higher. However, food prices are expected to moderate over the forecast period, and oil prices from 2009. Overall, the inflation rate largely tracks price movements in South Africa (the source of 90% of Swaziland's imports). We expect the official inflation rate in South Africa to be on a downward trend in 2008-09 and that Swaziland's inflation will fall in line with this, to 6.5% in 2008 and 6% in 2009. Higher oil prices than expected or a downturn in food production in the region will continue to pose price risks.