Year-on-year inflation in Serbia is 14 percent, and monthly inflation is 1.56 percent, according to the data of the Republic Institute of Statistics. In September, compared to last month, we paid more for housing, water, electricity, gas and other fuels (3.8 percent), restaurant and hotel services (3.7 percent), food and soft drinks (2.4 percent). The drop in prices was recorded only in the field of culture and transport. This was one of the topics of tonight’s Marker Insider Television.
Is inflation dead? This question was posed alongside a picture of a dinosaur on the cover of Bloomberg Business Magazine in 2019. That inflation will not go into oblivion became clear this year, when it gripped the whole world. For the US, this is the biggest crisis since 2008, and inflation in the Eurozone is currently at the highest level since its inception.
The phenomenon of inflation is not easy to understand, but what is clear to everyone is that it represents a big blow to citizens’ pockets.
The President of the Council of Governors of the National Bank of Serbia, Nebojša Savić, told “Insider Interview” that the fact that prices are 14 percent higher compared to last year means that we are 14 percent poorer.
“Inflation is a tax we all pay, but we don’t see it.” When we explain the phenomenon of inflation, we are talking about the fact that prices rise, and that as much as prices rise, if income does not follow, we will be poorer. If the income follows the prices, then it will be less”, explains Savić.
The increase in prices by 14 percent makes it clear to us that now for 1000 dinars we will put much less products in the basket than a year ago.
Last year at this time, we could buy a liter of oil for 180 dinars, now the cheapest oil is 190 dinars. After the abolition of the limited price, a liter of milk cannot be found below 140 dinars. And meat has become more expensive, so instead of 350 per kilogram of chicken, you now need to spend 500 dinars.
What all led to inflation?
Economist and program director of LIBEK, Mihailo Gajić, points out for Marker that inflation is accelerated by disruptions in the energy market.
“Energy is used as an input in production, so if you want to make a product, you have to use some energy to make it.” The increase in energy prices will ultimately affect the level of costs that a company has, and this will be reflected by increasing the prices of its products to compensate for this”, says Gajić.
However, war is not the only culprit for inflation. The consequences of disruptions in supply chains, but also of excessive printing of money during the corona, have now come to account.
Gajić points out that the unprecedented monetary impulse during the corona virus pandemic is one of the main reasons for the rise in prices.
“There was an increase in the monetary mass and the pumping of money into the economy, in the amount of about 35 percent of the previous mass, compared to just a year ago, and that had to end with inflation at some point, because you have less goods in the system but you have more money than before”, believes Gajić.
When prices will start to fall, experts say it is difficult to predict. On the other hand, the projections of the National Bank of Serbia show that inflation will slow down by the end of the year, and that a return to pre-crisis levels can be expected in 2024. However, the Central Bank of Serbia warns that these expectations are based on the assumption that Europe will not run out of Russian gas, Insajder writes.
