"Inflation could reach 8.6 percent"

Inflation in Serbia could accelerate to 8.6 percent by the end of the year, the Institute for Market Research said Monday.

Izvor: B92

Monday, 01.10.2007.

20:02

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Inflation in Serbia could accelerate to 8.6 percent by the end of the year, the Institute for Market Research said Monday. Further tightening of the country's monetary policy, intended to maintain the inflation rate under control should be expected, experts say. "Inflation could reach 8.6 percent" They pointed out that the reasons for higher inflation are high public expenditure and personal demand, as well as a severe draught earlier this year, which "served as an excuse for some producers to, using their monopoly position, raise the prices of their products." At the same time, the institute warned the dinar was unrealistically strong, causing a drop in domestic production and exports, and added this will likely continue as long as the National Bank of Serbia (NBS) uses the exchange rate as a "nominal anchor" against inflation. Meanwhile, Governor Radovan Jelasic downplayed warnings of inflation figures surpassing projected marks by the end of 2007, and announced that the NBS key rate remained at 9.75 percent. Although Finance Minister Mirko Cvetkovic last week said he expected the inflation to reach 8.5 percent this year, Jelasic still maintains that he expects the figure of 6.5, or "slightly up on that number." Jelasic also announced that the prices went up 6.8 percent in the first nine months of the year, with 4.9 percent related to those under state control. The country's hard currency reserves stand at USD 13.3bn, the governor said.

"Inflation could reach 8.6 percent"

They pointed out that the reasons for higher inflation are high public expenditure and personal demand, as well as a severe draught earlier this year, which "served as an excuse for some producers to, using their monopoly position, raise the prices of their products."

At the same time, the institute warned the dinar was unrealistically strong, causing a drop in domestic production and exports, and added this will likely continue as long as the National Bank of Serbia (NBS) uses the exchange rate as a "nominal anchor" against inflation.

Meanwhile, Governor Radovan Jelašić downplayed warnings of inflation figures surpassing projected marks by the end of 2007, and announced that the NBS key rate remained at 9.75 percent.

Although Finance Minister Mirko Cvetković last week said he expected the inflation to reach 8.5 percent this year, Jelašić still maintains that he expects the figure of 6.5, or "slightly up on that number."

Jelašić also announced that the prices went up 6.8 percent in the first nine months of the year, with 4.9 percent related to those under state control.

The country's hard currency reserves stand at USD 13.3bn, the governor said.

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