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NBS: Electricity price increase should not affect inflation
Monday, 22.07.2013.
07:19
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The President of the Governors’ Council of the National Bank of Serbia Nebojsa Savic, says that the announced electricity price hike should not affect inflation forecast and warns that any hesitation in the governmental reconstruction process could "send unfavorable signal" to the market.
Savic said that the central bank, when forecasting inflation for this year, predicted electricity price correction. Therefore, electricity price increase of 10.9% announced as of August 1, should not affect the inflation forecast.
Electricity price rise effect, as he explained, will have a two stage effect - direct effect at the moment of the electricity increase and then secondary one, in the next months which is a transfer of the increase wave to other products.
-I would say that some have already increased prices but we live in conditions of market trade more or less and I am expecting that the effect of market elements i.e. buyers will react to some increase - Savic said and pointed out that the spending power of citizens is low.
Mentioning that Serbia is always "infamous recorder: when it comes to inflation rate, Savic said that the Council of the National Bank of Serbia and the management of the central bank decided to deal with this “dragon”.
- This means that by the end of the year, i.e. in October, we should enter the corridor - and corridor is more or less 1,5 % - Savic said who pointed out that not only monetary policy measures should be applied when it comes to stability but that it is important that monetary policy is supported by other policies as well.
When asked how announced reconstruction can influence local currency, Savic said that the process of government reconstruction is in progress and that it would be good to do it as soon as possible.
- This hesitation can send a signal which may provoke negative signal with some market entities as we have already experienced - Savic warned adding that this inconvenient signal could be delay in construction process.
