Mountain Sports Inc. borrowed money for two years last week at 12%. The pure rate is 2%, and Mountain's financial condition warrants a default risk premium of 2.9% and a liquidity risk premium of 1.8%. The maturity risk premium for two-year loans is 1%. Inflation is expected to be 3% next year. What does the interest rate model imply the lender expects the inflation rate to be in the following year? Round your answer to one decimal place.