Electricity prices hike "won't trigger inflation"

The increase in the prices of electricity in August "will not cause any price rises," NBS Governor Jorgovanka Tabaković was quoted as saying by Tanjug.

Izvor: Tanjug

This is the case "as the more expensive electricity is part of the inflation projections for this year, and the rate of inflation should definitely not exceed 5.5 percent by October," Tabaković was also quoted by the news agency as telling the tabloid Informer.

According to announcements, the price of electricity in Serbia is due to increase next month by 10 to 12 percent.

“The direct impact of the announced increase in the electric power rates on inflation would be 0.55 percent. The higher prices will not affect the expenditures of enterprises much, and also their impact on retail prices is low, primarily due to low demand,” Tabaković said.

To a statement that though the statistics say that the inflation rate is 9.9 percent, "people feel financially that the price increases are more serious than that," the NBS governor responded by saying that "the statistics did not lie, but every citizen is observing price movements from the perspective of their own needs."

“It is a fact that a significant part of the population spends a large part of their earnings on basic needs, especially food. Food prices went up very sharply in the previous period and were a crucial generator of crisis. Because of this, the more vulnerable part of the population has the feeling that that the inflation is bigger, since it hit their buying power more than the statistics can show,” said Tabaković.

Last year, Tabaković pointed out, the high food prices were caused by a “higher power,” i.e. a very dry year. “The new season, however, even if it is an average one, will make food cheaper and its share in the households' expenditure budget smaller,” she said.

To make sure the effects are more serious on a longer term, at least two things are required - the government needs to take agriculture policy measures to stabilize the food market and it needs to improve the citizens' standard of living in real terms.

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