Inflation to drop gradually - 7.9% in June 2009

- Inflation in June 2009 will be gradually dropping and it will come close to the bottom limit of the target spread of 7.9% - the Governor of the National Bank of Serbia (NBS), Radovan Jelašić, said today (June 10, 2009).

- We expect significant drop in overall inflation in the third quarter of the year, the main reasons for which will be decrease in prices of agricultural products and deceleration of growth of controlled prices - Jelašić said at the press conference.

According to NBS' estimates, the prices of oil derivatives will be increased by 5.4% in the third quarter of the year, the prices of public utility-housing services will grow by 2.5%, while the prices of cigarettes will be increased by 2%.

As Jelašić explained, retail trade in the first quarter of the year dropped, for the first time in few years, by 11.4%, but the decline in April was decelerated. Due to drop in turnover and economic activities, as well as because of the avoidance of tax obligations, the incomes from value added taxes (VAT) have been reduced.

- Salaries and pensions, which are frozen until the end of the next year, will be reduced by 12% because of the growth of inflation - Jelašić pointed out.

The Governor said that the exchange rate and foreign currency liquidity were stabilized without NBS' intervention because it had not been trading in the foreign currency market since the end of February.

- The monetary policy has ensured the satisfying level of solvency and it stimulates credit activities, so that fiscal stimulus is now the key factor of future sustainable growth - the Governor explained.