Inflation averaged 14.5% in 2010, driven by rising fuel prices following the reduction in subsidies, supply bottlenecks caused by delays in importing goods-the source of around 90% of consumer goods-and further depreciation of the currency. Although the BNA's capacity to support the kwanza has improved with the recovery in the level of international reserves, its loss of independence in setting monetary and exchange-rate policy to the ministries of finance and planning is likely to result in the politicisation of interest-rate policy, which will constrain its efforts to control inflation. Moreover, further planned reductions in the fuel price subsidy in 2011-12 will add to inflationary pressures, as will currency depreciation (which will increase the cost of imports) and lower interest rates. Nonetheless, assuming that price control adjustments gradually start to address underlying distortions, we forecast that inflation will start to fall moderately from 2012.