Inflation Should Be Halved by Year-End – Can Prices Start Moving in Reverse?

Inflation is still the biggest global concern. Each fourth citizen of the world sees the growing prices as the biggest problem of today. The National Bank of Serbia (NBS) has some good news – the inflation is slowing down and should be halved by the end of the year.

However, the vice-governor of the NBS, Ana Ivkovic, points out that the slowing down of the inflation does not automatically mean that “the prices can start moving in reverse.”

– We discussed this during the May Inflation Report, some ten days ago. We are observing, measuring and communicating two inflation measures – the first is the year-on-year inflation, which is 1.1 percentage points lower compared to the year-on year inflation from March. The second category we are measuring are month-on-month inflation rates – Ivkovic explains.

She emphasizes that several shocks have combined together and that we have had pretty high month-on-month price growth rates, not just in Serbia, but everywhere in the world.

– If you look at Serbia, from April last year till February, December excluded, the month-on-month growth rates were over one %, mostly 1.5%, which is pretty high and not usual. In March, it was 0.7%. If we observe the coming period, excluding the months in which there will be adjustments to the prices of electrical energy and gas, we will have low month-on-month inflation rates, which will generate the lowering of year-on-year inflation rates – Ivkovic explains.

She announces that, as soon as next year, the inflation will enter the target band – 3 +/– 1,5%.

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