We estimate that annual average inflation rose in 2010 owing to higher oil and non-oil commodity prices and a fall in agricultural output, which increased the cost of wheat imports. We have revised up our forecast for oil prices in 2011, to an average of US$101/barrel (although prices may rise even further on fears of contagion of unrest to oil-exporting countries). We have raised our forecast for inflation in 2011, to an average of 5.3%, to reflect these higher oil and commodity prices. A relatively tight monetary policy will ensure that inflation remains manageable during the forecast period, at an average of 4.2%. Average inflation fell to 3.2% year on year in February. The explanation for this surprisingly low figure is that upward pressure on prices from supply-chain bottlenecks (arising from work stoppages) and from higher global commodity prices has been offset by reduced domestic demand.