Country Report Comoros March 2011

The domestic economy: Inflation moderates

Having peaked during the 2008 food and energy crisis, inflation has moderated substantially, to around 3% in late 2010, due in part to the country's membership of the Franc Zone, which limits the government's ability to print money to finance deficits and hence curtails the growth of the money supply. Fuel prices are building, however, because of ongoing political instability in the Middle East, and international prices for the staple food, rice, are expected to rise marginally in 2010. The Economist Intelligence Unit therefore believes that the Fund's projection of an annual average rate of 3% in 2011 is likely to be exceeded, and that inflation is more likely to average some 3.5%.

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