Prices increased by 3.9 per cent during 2008, compared with inflation of 2 per cent during 2007, according to an inflation update published on 20 January.

Rising food prices drove the headline inflation figure. Food inflation was 6.8 per cent last year, while non-food inflation was just 1.4 per cent.

Morocco’s underlying inflation, which excludes commodities such as diesel that are subsidised by the government, grew by 4.5 per cent.

The country’s largest cities were the worst affected, with headline inflation climbing 4.9 per cent in Rabat, 4.5 per cent in Tangiers, and 4.1 per cent in Casablanca.

The government’s budget deficit came under severe strain during 2008 after ministers decided against passing on the oil price spike last summer (MEED 11:7:08).