Source: Euronews Srbija | Monday, 11.04.2022.| 12:03
Highlight an article Print out the news

Has the “Inflation Monster” Risen or Will the Growth of Prices and Interest Rates Be Moderate?

Illustration
Illustration (Photo: RomanR/shutterstock.com)
The inflation pressures in the global and local markets are stronger than expected, which is why the National Bank of Serbia has decided to further tighten the monetary conditions. The NBS Executive Board raised the key policy rate from 1% to 1.5%, and the main reason is the latest inflation report for February, when it reached 8.8% and came close to a double-digit percentage.

What worries the citizens the most is how the changes to the key policy rate will influence the interests on their loans, whereas experts say that Serbia shares the fate of other European countries when it comes to global inflation pressures.

A professor at the Belgrade Banking Academy, Malisa Djukic, says that the increase of interest rates will have an impact on the repayment of dinar loans, where the contracts say that the interest rate is changeable, but that no sudden jumps of interest rates should be expected for either dinar or euro loans.

– Investors expect the interest rate in Europe to increase 0.5% at the end of the year. That is what the market expects and it is a consequence of the fact that inflation pressures are also growing in the EU. Several days ago, it was announced that the inflation in Spain was at 10%, a 40-year peak – Djukic said.

The economist Sasa Djogovic estimates that the inflation in the second trimester will amount to 10%. That means that foodstuffs, energy, but also loans, will become more expensive, especially after the NBS made the decision to increase the key policy rate to 1.5%.

– The inflation monster has risen and it is eating into salaries and pensions in Serbia. According to the latest data available, from February, it is 8.8% and we are getting closer to a double-digit percentage. If it hadn’t been for the freezing of the prices of the basic foodstuffs, such as flour and oil and the limiting of the prices of motor fuels, we would have already exceeded that threshold. It says that we truly lead an expensive life here. The salaries and pensions which have been increased have already lost value thanks to this inflation monster which is still feeding itself and it will continue to have a good appetite, because we are looking at a further growth of prices – Djogovic said.

He estimates that, as soon as the prices of the basic foodstuffs, which were frozen on the level of November 15, 2021, are unfrozen, the prices will inevitably go up and he explains that it depends on the market activities by how much they will increase.

He points out that we spend the majority of our home budget on food, motor fuels, gas and electricity, and that the poorest citizens, who set aside the most for food products, will be affected the most.

Only logged-in users can comment.
Follow the news, tenders, grants, legal regulations and reports on our portal.
Testiraj besplatno!
Register for our daily business bulletin, which is sent to your email address at the end of each work day.
Full information is available only to commercial users-subscribers and it is necessary to log in.
Test for free!
Testiraj besplatno!
Full information is available to commercial users-subscribers only.
Testiraj besplatno!

Log in to view complete information:
Forgot your password? Click here HERE
For free test use, click HERE