Inflation To Remain Moderate

Algeria's consumer price inflation, which came in at 5.2% year-on-year (y-o-y) in July, will moderate over the medium term in our view. The July print, which was a marked rise from the 3.7% recorded in the previous month, was mainly due to a rise in food prices, which rose 6.9% y-o-y. The 'food' component, comprising 43.1% of the consumer price basket, pulled the headline figure up substantially despite the fact that the bulk of the components in the consumer price basket, including the 'transport' component (with the second-heaviest weight at 15.9%), remained subdued. We note that base effects have played a major role in the elevated July print, and therefore we are maintaining our 2011 and 2012 average inflation forecasts of 4.0% and 3.0% respectively.

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