Inflation To Pick Up Again

We have revised down our end-2009 inflation forecast to 5.0% y-o-y to factor in lower than expected consumer price growth through to July. Nonetheless, we maintain that the trend over the medium term will be inflationary, with increased capital inflows, sustained high government spending and rising commodity prices expected to filter through to higher consumer prices in 2010 and 2011. Indeed, we forecast inflation to accelerate back to 10.0% y-o-y and 11.0% by end-2010 and end-2011, respectively.

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