The peak of inflation in February

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Inflation in the first quarter will be around 7.9 percent or slightly above that, and then it will start to fall from the second quarter, officials of the National Bank of Serbia estimated at the presentation of the February Inflation Report.

The Governor of the National Bank, Jorgovanka Tabaković, pointed out that inflation in Serbia is currently determined by the growth of energy and food prices.

“Monetary policy measures have little or no impact on them. The NBS cannot reduce the prices of oil or the prices of agricultural products that are commodities. What the NBS can do is prevent the effects of these prices from spilling over into the prices of other products and services to a greater extent, “said Tabaković, adding that by keeping the dinar exchange rate against the euro, they managed to increase the overflow of import prices not by the effects of depreciation. She reminded of the period 2010-2012. years when the prices of energy and raw materials also rose, but as she said then, the depreciation of the dinar tripled the effects of import prices.

According to her, over the past year, core inflation has been within the target range. On average, it was a little over two percent, and at the end of the year it reached 3.5 percent.

“It is lower than in most CEE countries that have similar monetary policies,” she said.

Savo Jakovljevic, director of the statistics sector, pointed out that almost all central banks adjusted their inflation projections upwards.

“Increased cost pressures based on the price of energy and raw materials continue to generate inflation, but to a lesser extent, because most of it has already been transferred to consumer prices. During the first quarter, inflation will be at the level of December (7.9 percent) or slightly higher, and the peak is expected in February, and then fall. The reduction in inflation will be mostly due to the increase in the price of oil products, and in the middle of the year with the new agricultural crop there will be a reduction in prices of fruits and vegetables, as well as raw materials for the food industry “, said Jakovljevic.

He added that there is no fear of overheating the economy, because with the growth of economic activity, the capacities also increase.

According to Milan Trajković, Deputy Director of Statistics and Research at the NBS, the movement of inflation will be mostly influenced by the agricultural year. He points out that unprocessed food has risen in price by 20.9 percent, primarily fruits and vegetables and fresh meat, while processed food has risen in price by eight percent. According to him, the main factors in the growth of prices were the movement of prices on the international market. Cereals went up by 45%, milk by 30% and sugar by the same amount.

“These are stock exchange products and prices are spilling over into our market. In addition, the drought has led to rising prices for both domestic fruits and vegetables. With the arrival of the new agricultural season, the prices of both unprocessed and processed food should fall, primarily in the third and fourth quarters of this year. If the agricultural season was better than the average, inflation could be below three percent, and if there was a drought, inflation would remain at the upper limit of the target (about five percent, Nov.) “, said Trajković, Danas writes.