On an annual average basis, consumer price inflation accelerated to 5.1% in 2010, up from 4.8% in 2009, a nine-year low, as domestic prices responded to an increase in international crude oil and non-oil commodity prices. Although BI has embarked on a process of normalising interest rates, inflationary pressures in 2011 will build as economic activity starts to push against capacity constraints in the local economy. So too will a further increase in international commodity prices, notably for crude oil and grains. Although the rupiah's continued appreciation against the US dollar will limit inflation, as will the government's decision in late January to suspend import duties on a range of goods, particularly foodstuffs, price pressures are evidently increasing. As a result, we have revised up our forecast for average inflation this year to 7.3%, from 6.7% previously, above BI's 4-6% target range. The rate of inflation will then slow, to an average of 6.3% a year in 2012-15. The primary risk to our forecast comes from the possibility that high international oil prices could force the government to raise administered fuel prices to keep the budget deficit under control, especially as the government's assumption that oil prices (dated Brent blend) will average US$80/barrel this year is looking unrealistically low.