Inflation in Sudan remains high, partly reflecting supply bottlenecks (owing to inadequate infrastructure and uncompetitive markets). Central bank data suggest inflation rose to 15.4% in December, taking the annual average to 13.1%. Food price inflation spiked in January, especially in the south, as political risk concerns disrupted supplies. We forecast that inflation will average 11.1% in 2011 as the Sudanese pound depreciates further, growing to 11.8% in 2012 as world food prices rise. The government's plans to cut subsidies on sugar and fuel will also add inflationary pressure.