Bojan Stanić from the Serbian Chamber of Commerce tells Euronews Serbia that inflation is expected to be somewhere around 10 or slightly below 10 percent, although it was initially thought that it would be around eight percent at the end of the year.
Regarding the increase in the price of fruit, which on an annual level is more than 40 percent, he explained that this, as well as the price of fruit, was also affected by the weather conditions in Serbia.
“When we talk about food, it still remains dominantly high for the simple reason that we have a situation where the most demand is for food because its elasticity is low,” said Stanić, who specifically pointed to the reference interest rate, which is at 6.50.
As he stated, regardless of the fact that inflation is slowing down, the National Bank of Serbia continues to raise the interest rate, apparently seeing that inflation is not coming down fast enough. This, Stanić adds, also affects the increase in costs for repayment of both housing and consumer loans, and therefore there is less space left for financing everyday other needs, especially when it comes to daily purchases.
“Approximately 67 percent of our GDP is made up of consumption by the population. Under the influence of inflation, especially that part of the population that has below average income, and it is the majority, if they were under the pressure of these food and energy prices, you can imagine further how they will rise loan repayment costs and how much less space will be left for personal consumption. Inflation is slowing down, but not fast enough and will remain a problem in the next year as well,” Stanić believes.
According to him, earnings are starting to lose value in real terms, which means that those with below average incomes are losing purchasing power even more in real terms.
“When you look at sales in retail stores, regardless of the fact that their prices have increased in the first five months of this year compared to the same period last year, due to more inflation in quantities, these sales are falling, which means that people still buy less because their purchasing power has fallen . It is particularly worrying that we see an increase in unemployment in the first quarter of 2023. Now that rate is 10.1, and it was 9.2, and we are very impatiently waiting to see what the data will be for the end of the second quarter of this year. We have continuously present inflation that has produced negative the effect is that many of our basic factors are under a very negative influence,” said Stanić.
Stakić: A smaller percentage of imported inflation, we generated the rest”
Nikola Stakić, a professor at the Singidunum University, told Euronews Serbia that the data itself shows that the dynamics of inflation growth is declining, but not enough, and that he is not surprised by the further tightening of the monetary policy of the NBS.
The fact that, as Stakić says, the price of vegetables has risen due to unfavorable meteorological conditions and heavy rainfall, even though it should be the opposite in the season, leads to a conclusion that is slightly different than what is being promoted in public opinion.
“That inflation, of which some say that two-thirds is imported, shows that maybe a smaller percentage of imported inflation, and the rest of the inflation is the one that we have generalized internally in our economy precisely because of these products, a good part of which originates from our market, not from foreign trade “If the rate of price growth continues at this pace and speed, I don’t believe that we will reach a goal like the NBS said that inflation will be halved and that it will be eight percent by the end of the year,” said Stakić.
According to him, we still have a month-on-month price increase of around 0.7 percent.
“Prices are still rising, they need to rise much less or even by the end of the year in certain months we have a drop in prices on the monthly nov so that we can eventually lower inflation to eight percent, as was said a few months ago. We should not forget , it has not been confirmed yet, that most likely we will be waiting for another increase in the prices of electricity and gas as one of the basic inputs in the fall,” says Stakić and adds that this can only further fuel inflation.
Stakić said that we have a slowdown in inflation, but that this slowdown is not fast enough and that we are facing some “unpleasant” surprises from month to month.
“In this case, it was vegetables. It doesn’t mean that there won’t be something else in the next month. I’m of the opinion that inflation will fall. In the second half of last year, there was a big acceleration of inflation, when you have a high base, then next year’s numbers will be lower, how much lower, no one can accurately bid. I am not optimistic that at this rate inflation will drop to the level of eight percent at the end of this year,” concluded Stakić.
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