Energy prices are causing an inflationary blow in Serbia

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The increase in the price of electricity for the economy from January 1 will affect the growth of inflation in Serbia, households should expect higher prices of electricity and gas from the middle of the year, and whether drivers will face a sharp rise in gasoline prices depends solely on world oil market.
The expert public points out that it is inevitable that inflation will rise, which will be greatly influenced by the rise in electricity prices for the Serbian economy. The Republic Government has made a decision to limit the price of electricity for the economy to 75 euros per megawatt-hour without VAT in the first six months of 2022.
The move by the cabinet of Prime Minister Ana Brnabić is explained by the desire of the authorities to help the functioning of the economy in the conditions of rampant electricity prices on the stock exchanges, due to weaker electricity production and insufficient gas in the European Union.
However, businessmen did not react with approval to the Government’s decision, and at the end of December there was a controversy between Zoran Drakulic, president of the Serbian business circle “Privrednik”, and Radovan Stanic, executive director for electricity supply at EPS.
While Drakulic explains that in practice it is a matter of raising the price of electricity for the economy, in the amount of about 50 percent, Stanic claims that the price is significantly lower than the one on world stock exchanges, which automatically means that it is more favorable.
Regardless of the different interpretations of that specific thing, what is definitely certain, experts claim, is the increase in inflation in Serbia, because in order to compensate the costs due to higher electricity prices, businessmen will increase the price of their products.
Regardless of the fact that EPS was forced to import large quantities of electricity from abroad due to the collapse of the electricity system in mid-December, which it paid for at very high winter prices on a daily basis, Serbia should not expect an increase in electricity prices by the end of the heating season.
Given that due to poverty in Serbia, a significant number of households are heated by electricity, this information is an encouragement to all those who do so.
The elections are on April 3, and it does not occur to the authorities to burden the voters with higher electricity bills until then.
However, after the elections are over, the expert public claims that it is impossible to avoid the blow to the pockets of consumers through the increase in the price of bills.
As for gas, it will be the same story as with electricity.
Until the middle of next year, Srbijagas will continue to buy “blue energy” from Russian “Gazprom” at a price of 270 dollars for 1,000 cubic meters.
Regardless of the fact that due to excessive consumption from the underground gas storage “Banatski Dvor”, Serbia was left with very small reserves of “blue energy” and was forced to buy additional quantities from Russia at a price significantly higher than previously agreed and extended in the future for six months, the price of gas for households will not change during the heating season due to the election.
After that, it will surely jump, experts are convinced.
As for oil, according to the estimates of the executive director of the Russian giant Gazpromneft, Alexander Djukov, its price should be lower in the long run and in the range of 50 to 65 dollars per barrel.
However, he does not rule out the possibility of excessive price growth, “which could affect the global economy and demand”, which would result from increased production of “black gold” by producers who are not part of the OPEC + group.
It will depend on the movement of wholesale oil prices whether drivers in Serbia will encounter enormous price increases or can count on a drop in prices.
Energy expert Goran Radosavljevic says for Danas that an inflationary blow should be expected in the current year and that the growth of energy prices will greatly affect him.
The increase in inflation awaits us first of all due to the increase in the price of electricity for the economy in Serbia.
The answer of businessmen will be to increase the prices of their products, so that in the end, it will be the citizens who will pay the price of increasing the price of electricity for commercial consumers.
When it comes to the price of electricity for households, I do not believe that it will increase before May or June. The reason is elections.
After they end, the increase in the price of electricity and gas in retail is completely expected – our interlocutor explains.
When it comes to oil prices, Radosavljevic expects that they will stabilize and reach the level of prices that was current before the crown.
He emphasizes that such a trend will also reflect on the stability of retail prices, so in 2022, unless unforeseen circumstances occur, one should not expect extreme price fluctuations in Serbia.
Economist Milan R. Kovacevic also believes that a new inflationary shock is inevitable and that the increase in the price of electricity for the economy will push it.
To prevent business losses, businessmen will be forced to increase the prices of their products, which will be a blow to the household budget of consumers and will lead to inflationary growth. An increase in gas and electricity prices for households should be expected after the April elections are over. Considering that many businessmen in the world were forced to limit their production due to the corona virus, and some of them to leave the business they are engaged in, there is a possibility that oil prices will fall this year. It all depends on how much demand there will be for it, and as for retail prices in Serbia, they will depend on the movement of oil prices on world stock exchanges – Kovacevic concludes, Danas reports.

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