determinant of inflation, so, although we may not be targeting short - term growth, our monetary policy is not set independently of such developments. 2. inflation developments as is now well known, the depreciation of the rand during the last quarter of 2001 resulted in a surge in inflation which prevented us from realising our inflation target for 2002. we had been well on course to achieving that target, with cpix inflation having fallen below the 6 per cent level in september and october of 2001. since november 2001, inflation accelerated and the average for 2002 was 10 per cent, 4 percentage points above the upper band of the inflation target. fortunately cpix inflation appears to have peaked in november of 2002 at 12, 7 per cent. since then we have seen a gradual decline, with rates of 11, 3 per cent in february and 11, 2 per cent in march. at these levels, we are still significantly far off from our inflation target of 3 - 6 per cent. however, there are a number of pointers to a sharper decline in the inflation rate over the next few months. firstly, the quarter - on - quarter figures which give a better indication of the short - term trends show that on an annualised basis cpix decelerated from 14, 5 per cent in the fourth quarter of 2002 to 6, 7 per cent in the first quarter of 2003. what was particularly gratifying was that the main driver of inflation in 2002, food price inflation, fell steeply from an annualised rate of 18, 7 per cent to only 2, 4 per cent over the same period. secondly, to the extent that the producer price index is an indicator of future consumer price inflation, the prognosis for a significant decline in cpix inflation is good. the year - on - year all - goods ppi in march 2003 was down to 5, 1 per cent, with a lot of impetus coming from the recovering exchange rate of the rand - the imported component of the cpi fell to 0, 5 per cent, the lowest rate of increase since may 1998. measured quarter - to - quarter and annualised, these rates were even more encouraging with negative inflation being recorded. the all - goods ppi inflation was minus 3, 6 per cent, while the imported component was minus 10, 4 per cent. thirdly, the forecasting model of the sarb also indicates a sustained decline in cpix inflation during the course of the year. however, a word of caution

##s project itself started in 2005 under mr b r gujadhur, then first deputy governor of the bank. the banking community has been closely associated with the project right from day one. in 2007, there was an exploratory mission to hong kong and singapore, which was headed by the present first deputy governor of the bank. the ceo of mba also formed part of the delegation as did banking industry representatives. unfortunately, we ran into some administrative hurdles on the way, and the project found itself delayed considerably. the cts, which we are preparing to launch, is only the initial phase. in fact, more advanced systems of cheque truncation cater for image capture directly at points of sale ( pos ) and atm ’ s – as is the case in india for example. as we implement other stages of the cts, bank customers will not have to go to their banks ; truncation will be done at the pos. we are also launching the bulk clearing system ( bcs ) which is a missing block in the mauritian payment system. the bcs will cater for high - volume, low - value transactions such as salary payments, standing orders and direct debits. in the next phase, we envisage the implementation of a national switch to cater for card and pos transactions. the need for the cts the cheque is currently the most visible and most widely - used instrument of payment in mauritius. currently it represents around 20 per cent of all non - cash transactions. in spite of several modes of electronic payment that banks have put at the disposal of their clients, an average of 21, 000 cheques pass through the plach each day, for an amount of almost a billion rupees – representing 20 per cent of total macss transactions. if we take into account the number of intra - bank cheques, the daily volume of cheques approximate 50, 000 for a value exceeding 2. 6 billion rupees. these are serious numbers! over the past five years, the volume of cheques handled by the plach has remained in the range of 5. 2 million to 5. 4 million annually, with the aggregate value constantly on the rise. we had to find a way to cope with this avalanche of cheques. cheques, as debit instruments, come with an intrinsic settlement risk. a large proportion of unpaid cheques in the payment system may lead to systemic risk. it is our responsibility to ensure that such