Inflationary pressures in Serbia remained low, which was contributed by the full supply of goods to the market, even in the conditions of a sudden and strong change in the structure of demand caused by the pandemic, the National Bank of Serbia states in its May Inflation Report.
“Inflation has been moving in line with our expectations since the beginning of the year and amounted to 0.6 percent year-on-year in April. Low inflationary pressures are confirmed by core inflation of 1.4 percent and anchored inflation expectations,” the central bank said in a report.
According to the May central projection, the NBS expects that year-on-year inflation will remain low and stable until the end of the projection period, ie that it will return to the target in the middle of this year and by the end of the year will move around the lower limit of the goal.
“With the recovery of demand and the strengthening of economic activity, we expect that inflation will gradually approach the central value of the target of 3.0 percent over the next year, but that it will remain below that value until the end of the projection period.” Compared to the February projection, the current inflation projection is at a lower level, primarily due to a sharp drop in world oil prices and a fall in aggregate demand.
Uncertainty regarding the realization of the inflation projection still, according to the NBS, is mostly related to developments in the international environment, primarily to global trade and economic growth, capital flows to emerging countries and world prices of oil and other primary products.
The movement of inflation will also depend on the speed of the recovery of domestic demand, as well as on the movement of regulated prices, the NBS notes in its May Inflation Report, Dnevnik reports.
