The consumer price index reached 198.6 in August of this year, slightly higher than the 196.9 registered in July. The variation rate in comparison to the same month last year stood at 4.7% on a nationwide level (0.2% in Praia, 0.7% in Praia and 1.2% in rural zones). The average rate for the twelve months preceding August reached 4.1% (2.2% in São Vicente, 4.3% in rural zones and 4.8% in Praia).

According to a source at the Bank of Cape Verde, following the recent sharp increase, the inflation rate could begin to drop again over the course of the next several months, with the final rate for 2006 expected to stand somewhere between 4 and 5% - higher than the government’s initial projection of 3.5%, but below the most pessimistic forecasts, which had inflation for 2006 rising above 6%.

The slowdown in the inflation rate over the next several months could bring monetary authorities to forecast a return to near zero inflation for 2007. The prospects of a good harvest this year, encouraged by the plentiful rains that have fallen since August, and the possibility of a drop in petroleum prices on international markers, could also positively influence the inflation rate.