World commodity prices are expected to rise briskly in 2011. Of particular relevance to inflation in Mozambique is the outlook for global food prices, as the country is highly dependent on imports of food, which has a heavy weighting in the consumer price basket. We expect global food prices to rise by 30% in 2011. However, government subsidies will lead to a lower local inflation rate, which we forecast at an average of 7.5%. World commodity prices are expected to ease slightly in 2012 as monetary policy tightens worldwide, encouraging a withdrawal of investment from commodities (speculation having partly driven the rapid rise in prices in 2010). However, the government is likely to use this opportunity to withdraw fiscally unsustainable subsidies, so the impact on inflation will be broadly neutral. Consequently, we expect inflation to ease only slightly in 2012, to an average of 5%.