On an annual average basis, consumer price inflation accelerated to 5.1% in 2010, from 4.8% in 2009, as domestic prices responded to an increase in international prices for crude oil and non-oil commodities. Although BI has embarked on a process of normalising interest rates, inflationary pressures in 2011 will build as economic activity accelerates. Another factor exerting an inflationary influence will be a further increase in international commodity prices, notably for crude oil and grains. Although the rupiah's continued appreciation against the US dollar and the government's decision in January to suspend import duties on a range of goods (notably foodstuffs) will limit inflation, price pressures are building. As a result, we expect inflation to average 6.9% this year, above BI's 4-6% target range. Nevertheless, the authorities' cooling measures are already taking effect: in February inflation slowed to 6.8%, thanks to the first year-on-year fall in food prices for four years. In 2012-15 inflation will slow to an average of 6.3%. The primary risk to our forecast comes from the possibility that high global oil prices could force the government to raise administered fuel prices domestically to keep the budget deficit under control, especially given that its assumption that international oil prices will average US$80/barrel this year looks unrealistic.