Increase of food and energy prices accounts for 70 pct of November inflation

BELGRADE - November Serbian inflation measured 15.1 pct y-o-y, consistent with National Bank of Serbia (NBS) expectations and close to the October outcome, the central bank has said, noting that around 70 pct of headline inflation remained attributable to food and energy prices. 

"At monthly level, consumer prices edged up by 1.0 in November, slowing considerably from October. The monthly inflation profile continued to be determined by the rising prices of processed food, energy and prices within core inflation," it said in a statement. 

"The monthly growth in food prices amounted to 1.2 pct in November and was driven by the prices of processed food (2.4 pct), while those of unprocessed food worked in the opposite direction having fallen by 1.0 pct.

Relative to November 2021, food prices were higher by 22.5 pct. The robust y-o-y growth in food prices stems largely from supply-side factors, on which monetary policy measures have a limited effect – notably high global food prices, rising prices of food production inputs and transport, and negative effects of the drought, both at home and in most of Europe.

Energy prices also picked up in November - by 1.2 pct m-o-m, receiving almost equal impetus from the prices of petroleum products (1.5 pct) and solid fuel (2.8 pct).

Core inflation (CPI excluding food, energy, alcohol and cigarettes) stayed much lower than headline inflation and amounted to 9.7 pct in November, supported to a significant degree by the preserved relative stability of the exchange rate in an extremely volatile global environment.

Core inflation growth slowed down from the previous months, possibly indicating a gradual easing of cost-push pressures, which might be explained also by the slower euro area inflation and slackening producer price growth at home and abroad," the NBS also said.

"Under the current medium-term projection, headline inflation will remain elevated until the end of this and early next year, only to strike a downward path thereafter, declining more vigorously in H2 2023 and returning to within the target tolerance band by the end of the projection horizon.

Inflationary pressures will abate owing to past monetary tightening, the anticipated waning of the effects of global factors that led the energy and food price growth in the prior period, and lower external demand amid a clouded global growth outlook," it said.