Jelašić warns of rise in inflation

NBS Governor Radovan Jelasic says a decision will be taken after the IMF’s visit in August on whether added measures are needed, including a rise in VAT. Besides announcements of potential corrective measures, the National Bank of Serbia (NS) governor warned that inflation in Serbia was not falling as expected, attributing this to the steep rise in controlled prices. Jelasic warns of rise in inflation The sudden rise in prices was a major obstacle to achieving the plan of keeping base inflation in single figures by the end of the year, he said. In the first five months alone, prices had risen 13 percent, which was only two percent less than the plan for the whole year, the governor observed. “If you compare it to last year, inflation is not falling at the rate we expected. The main reason for this are continued controlled prices,” said Jelasic. He warned that the state must not allow controlled prices to grow more than two percent over the next seven months. “I hope that everyone’s realized that if we are to live better or worse, it doesn’t depend on how much salaries will rise, but on how much inflation will be,” said the governor. “Salaries and pensions have been frozen till the end of next year, and any shift in inflation by one or two percent means a fall in standards for all those whose salaries are in dinars, as they’ll have a lot less in their pockets,” he explained. At an annual meeting of bankers organized by Vojvodjanska Bank, Jelasic said that the IMF mission would be visiting again in August, and that a decision would be taken on whether to increase VAT afterwards. That possibility is already envisaged in the memorandum the government signed with the IMF. Radovan Jelasic (FoNet, archive)

Jelašić warns of rise in inflation

The sudden rise in prices was a major obstacle to achieving the plan of keeping base inflation in single figures by the end of the year, he said.

In the first five months alone, prices had risen 13 percent, which was only two percent less than the plan for the whole year, the governor observed.

“If you compare it to last year, inflation is not falling at the rate we expected. The main reason for this are continued controlled prices,” said Jelašić.

He warned that the state must not allow controlled prices to grow more than two percent over the next seven months.

“I hope that everyone’s realized that if we are to live better or worse, it doesn’t depend on how much salaries will rise, but on how much inflation will be,” said the governor.

“Salaries and pensions have been frozen till the end of next year, and any shift in inflation by one or two percent means a fall in standards for all those whose salaries are in dinars, as they’ll have a lot less in their pockets,” he explained.

At an annual meeting of bankers organized by Vojvođanska Bank, Jelašić said that the IMF mission would be visiting again in August, and that a decision would be taken on whether to increase VAT afterwards.

That possibility is already envisaged in the memorandum the government signed with the IMF.