Inflation rate in Serbia to return to target values in H1/2012.

By bne IntelliNews May 19, 2011
The inflation rate in Serbia is seen to remain above the central bank's target this year, but is expected to return towards target values (3%-6%) in H1/2012, the NBS vice governor Bojan Markovic said at a presentation of the central bank's May inflation report. Headline inflation will peak in April or May this year and will start to moderate afterwards, Markovic said. The forecast for moderation in inflation rate is based on the expectations that this year's agricultural season would be good. Stable inflationary expectations and low aggregate demand will also have an anti-inflationary effect, in addition to the expected moderation in food prices, which have driven headline inflation up in the previous period. Markovic recalled that the NBS has raised the benchmark interest rate by a cumulative 4.5 pps since August last year to 12.5%. IntelliNews comment : Inflation rate in the country reached 14.7% y/y in April and is considerably higher than the 5.5% +/- 1.8 pps target for that month. The sharp rise in food prices in the previous period has been the main contributor to the rising inflation. The government has started drafting measures in the agricultural policy in order to prevent large fluctuations in food prices.

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