A gradual recovery in domestic demand, higher global oil prices and a poor domestic harvest owing to a drought associated with the El Niño weather phenomenon contributed to an acceleration in inflation in 2010, when consumer prices rose at an annual average rate of 3.8%. Inflation will accelerate again in 2011, to 5.3% on average, in line with higher global commodity prices, especially for oil; we expect international crude oil prices (dated Brent Blend) to average US$108.5/barrel this year. Agricultural production, especially of rice, the country's staple food, has recovered this year, meaning that the Philippines will be partially insulated from an increase in global food prices. Annual inflation will average 4.6% in 2012-15. Wage pressures are likely to increase in line with economic growth, but the country's labour surplus will deter excessive wage demands.