Macroeconomic Forecast Iraq

Consumer price inflation (CPI) came in at -4.4% y-o-y in December 2009, bringing the average annual CPI rate to -2.8% for 2009. Core inflation, which excludes fuel costs, averaged 7.1% y-o-y in 2009, down from an average of 13.0% the year before. While we do expect headline CPI to tick up in 2010 - we are forecasting it to average 4.0% y-o-y - the anchoring of the exchange rate to the dollar should ensure that inflationary expectations remain relatively benign.

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