Since the beginning of the year, there have been visible increases in the prices of basic foodstuffs – meat, vegetables, cereals, eggs and milk. Economists Goran Radosavljevic and Mihailo Gajic, in a conversation for the Nova.rs portal, explained that this is influenced by numerous factors, such as the coronavirus pandemic, but that further growth can be expected.
According to the research of the daily “Danas”, in 2021, compared to 2020, the prices of vegetables increased the most, by 55.4 percent, while, in terms of products, potatoes became the most expensive – by as much as 83 percent. In the same period, the prices of cereals jumped by almost 40 percent, and of industrial plants by 37.5 percent. Wheat is now 42.7 percent more expensive, and corn by 39.4 percent.
However, what is perhaps most eye-catching is the price of meat, which is becoming more and more inaccessible to us.
According to Goran Radosavljevic, several great things have happened on the global level that have affected the growth of prices, and one of them is the growth of demand, due to the faster exit from the pandemic, which supply could not follow.
As economist Mihailo Gajić pointed out on the Nova.rs portal, the pandemic also affected product prices by interrupting the transfer of products across borders, and transportation later became more complicated and expensive.
According to Radosavljevic, another sphere is very important – and that is the sphere of energy, where there was a sharp rise in energy prices, which was not only economic but also political, which directly affected food prices.
According to him, preparations are underway for spring sowing, and everything that precedes it has become more expensive – fertilizer, and before that, gas, which is used to obtain artificial and mineral fertilizers. At the same time, the biggest input became more expensive – petroleum products, which will always spill over into product prices.
“For now, fortunately, not everything has spilled over into rising consumer prices, which does not mean that it will not in the coming period if input prices continue to be high and they are not decreasing at the same time. At the same time, everywhere in the world it is not decreasing demand for these inputs “, says Radosavljević, adding that certain countries use price freezing, which prevents some prices from rising in the short term.
The problem is, as our interlocutor points out, that our state reacts extremely slowly. According to him, last year’s inflation in Serbia was mostly driven by rising food prices, and this can be clearly seen from the inflation index.
“I saw that the governor of the National Bank shyly said that we would hang out with inflation a little more. The question is what that means at all, considering that inflation is present and is taking big steps,” Radosavljevic commented, adding that The problem is that the majority of the population of Serbia has an average, or even below-average income, and that they spend more than 50 percent of their income on housing and food, which has doubled in price. As he says, their personal inflation is in double digits, not 7.5 percent.
“Manufacturers and retailers have decided to optimize prices, on the principle of ‘I can’t raise the price of this, but I can do something else.’ so, someone who wants to eat better, will feel the difference now “, explains Radosavljević, but adds that it is important to emphasize that the state froze prices when they were already high enough.
As Gajic explains, state aid programs also have an impact, which refers to the monetary policy of central banks.
“So, on the one hand, we now have much less goods and services due to the pandemic, and at the same time we have much more money that is starting to ‘chase’ that reduced amount of goods and that is why the prices of a large number of products are rising,” Gajic said.
He adds that it is important to mention that farmers in Serbia faced a drought last year, and that production was poor, and when the amount of production is reduced – a suitable terrain for price growth is created.
The question is whether the price increase will continue, and Gajic says that this is a million dollar question.
“In the last few months, a large number of economists have said that this is transient inflation that will last only a few months, but we see that inflation has not yet ‘calmed down’ and returned to the planned limits. and this year, until the autumn, when it will return to the level it is aimed at in Serbia, 3 percent, plus or minus 1.5 percent “, explains Gajić, adding that the prices of certain products can be expected to increase in the next few months, Nova reports.
