However, non-mining sector performance could be weighed down by the limited domestic fiscal stimulus, as nominal government expenditure is only budgeted to increase marginally (0.1 percent) in 2012/13 and nominal personal incomes will continue to be sluggish. This outlook was also reflected in the fall in business confidence indicated in the recent (September 2011) Business Expectations Survey.
Although pressures on inflation arising from domestic demand are expected to be limited and the impact of foreign price developments are likely to be minimal this year, prices could go up due to an increase in the international cost of food that would exceed current projections. Inflation may also rise in the event of any substantial upward adjustment in administered prices and government levies.