Inflation To Remain Elevated Into 2012

Consumer price inflation (CPI) in Tunisia has ticked up in recent months, and we expect it to remain near Q411 levels through 2012. From a low of 2.9% y-o-y in Q111, inflation gradually accelerated to 4.4% as of end-November 2011, driven mainly by increasing food, energy and housing prices. Owing to budgetary pressures (which will weigh on subsidies), falling food prices, and supply constraints, we believe inflationary pressures will only decelerate. We have pencilled in inflation of 4.0% at end-2012. Producer prices will increase at a higher rate, and we project end-2012 growth of 6.5% y-o-y.

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