Falling commodity prices since July 2008 and weaker demand conditions have contributed to a decline in inflation in developing countries. Econometric estimations suggest that median inflation, after increasing from about 6 percent in 2007 to a peak of more-than 16 percent by mid 2008, could decline to less-than 2 percent by the end of 2009. In a number of countries in which food carries a larger weight in the household consumption basket, headline inflation could temporarily turn negative. The disinflationary influence of lower commodity prices will dissipate towards the end of 2009, allowing median headline inflation to stabilize around 4 percent in 2010. Headline inflation is projected to pick up in 2011, as underlying core inflation will once again be the dominant influence on overall rates of price changes.
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