Serbian government caps fuel prices

Serbian govt caps fuel prices as inflation soars

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The Serbian government capped the retail prices of petrol and diesel for the next 30 days in a bid to to keep inflation in check.

“The government passed the decree on limiting the prices of petroleum products in order to prevent greater disturbance and maintain the living standards of the population, considering that the prices of petroleum products increased in the previous period, which directly influenced the growth in prices of all other goods and services,” it said in a statement on Thursday (Feb. 11).

Prices of petrol and diesel fuel will remain at 179 dinars ($1.73) and 171 dinars per litre respectively, for a month it said.

“In the previous period there was an increase in the prices of these (oil) derivatives, which directly affected the increase in prices of all other goods and services.”

Last month, the Serbian government extended by 90 days a price freeze on food staples including sugar, milk, pork, sunflower cooking oil and flour at their November levels.

“Since the decree came into effect, there have not been any bigger fluctuations. However, due to the continued inflation pressures, which, according to the estimates of the National Bank of Serbia, will last until the third quarter of the current year, our position is that it is necessary to extend the validity of the decree,”  Mrs. Tatjana Matic, Minister of Trade told local daily Novosti.

Serbia’s annual inflation rate accelerated to 7.9% in December of 2021 from 7.5% in the previous month and above market expectations of 7.5%. It was the highest reading since July of 2013 and above the top-end of the central bank’s target range of 3% plus or minus 1.5 percentage points.

The Balkan country’s Statistics Office will announce inflation data for January on Feb 22.

The National Bank of Serbia kept its benchmark interest rate unchanged at an all-time low of 1% on Thursday. Policymakers said that inflation, driven by energy, raw materials, and agricultural goods prices, should recede by the end of the year.

However, the central bank noted that core inflation was still within the target, averaging 3% in the previous months. Accordingly, rate setters expect inflation to remain high and slow towards the 3.5%-4% level at the end of the year.

Last year, Serbia’s the total economic activity measured by the real movement of the gross domestic product (GDP), recorded a growth of 7.5% compared to 2020, according to the Statistical Office.

General elections are scheduled to be held on April 3 this year.

Serbia economic indicators

GDP Annual Growth Rate: 7.5% (2021)

Inflation: 7.9% (Dec. 2021)

Unemployment: 10.50% (Q3 2021)

Interest Rate: 1% (Feb. 2022)

($1 = 103.2100 Serbian dinars)