Year-on-year inflation in Serbia reached 14% in September: Food and energy dictated dynamics

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September inflation in Serbia amounted to 1.5% at the monthly level or 14.0% in y-o-y terms, which is consistent with the NBS expectations, the Serbian central bank has announced and added that the y-o-y inflation dynamics was dictated by the rising food and energy prices.

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This continued to account for around 70% of headline inflation. Y-o-y core inflation, which is affected by monetary policy measures to a greater degree, remained significantly below headline inflation and measured 8.6%, the central bank said.

The prices of food and non-alcoholic beverages went up by 2.4% relative to August.

Within this growth, processed food prices increased by 2.2% m-o-m. However, their y-o-y growth reached 20.8%, reflecting persistently high global food prices, rising prices of input costs in food production and transport, as well as the negative effects of drought, both at home and in most of Europe.

At the same time, unprocessed food prices rose by 2.7% m-o-m and by 19.6% y-o-y.

When it comes to energy prices, September saw a 0.9% fall in petroleum product prices, but also an adjustment in electricity prices and a further rise in solid fuel prices. As a consequence, overall energy prices went up by 2.6% in September.

Under the impact of persistently strong cost-push pressures and elevated imported inflation, the prices within core inflation (CPI excluding food, energy, alcohol and cigarettes) continued up in September, announced the NBS.

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However, core inflation in Serbia continues to move at a much lower level both compared to headline inflation and core inflation in some countries of Central and Southeast Europe.

The lower level of core inflation is still underpinned by the preserved relative stability of the exchange rate in extremely uncertain global conditions and medium-term inflation expectations of the financial sector which are moving within the target band.

According to the August projection of the Executive Board, y-o-y inflation will steadily slow down over the coming months, settling by the end of the year at a level lower than now.

Its continued decline is expected next year as well.

Working towards the calming of inflationary pressures will be the past tightening of monetary conditions, the expected weakening of the effects of global factors that drove the growth in energy and food prices in the prior period, and lower external demand amid a gloomy global growth outlook.

The adopted government economic measures that capped the rise in food and energy prices at home will also contribute to the soothing of inflationary pressures in the short run, said the NBS.

(Telegraf Biznis/Tanjug)