The capping of food prices to be extended in Serbia

We reported recently that the Serbian Government put a price cap on six basic foodstuffs on November 30 last year. The Decree came into force on December 1, 2021, and will expire on February 8, 2022. In light of the general elections to be held on April 3 this year, Mrs. Tatjana Matic, Minister of Trade explained the necessity to extend the limitation:

 “A new Decree is being prepared, one which will be sent to the government for adoption, and the foodstuffs whose price limitation is already in effect will be covered. The prices of consumer goods are monitored on a daily basis by the competent Ministry. 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,” Minister Matic stated to daily Novosti.

The decree will remain in effect for a duration that will depend on the stance of the Serbian Government which, in turn, will make its decision on the basis of the reports of the Food and Agriculture Organization of the United Nations and trends on the global market.

According to the president of the Fiscal Council of Serbia, Mr. Pavle Petrovic, households in Serbia are already suffering from inflation of 10 to 15% although the annual growth of all prices in November 2021 was 7.5%. “The acceleration of inflation in Serbia has a very prominent social dimension because, in the last year, food and energy prices have risen the most, i.e. products on which lower income citizens spend the most of their salary on,” Mr. Petrovic said, adding that unlike in 2021, when inflation mostly came from external sources, the growth of prices in Serbia in 2022 will largely depend on the economic policy implemented in the country.

“An important indicator that inflation could be brought back under control is that core inflation, the one excluding energy, food, alcohol, and cigarettes, has remained relatively low at 3%,” Mr. Petrovic explained.

The total economic activity in Serbia in 2021, measured by the real movement of the gross domestic product (GDP), recorded a growth of 7.5% compared to 2020, reads on the website of the Statistical Office of the Republic of Serbia (RZS). In 2021, agricultural production fell by 5%, while in the same period, industrial production grew by 6.3%, and the processing industry grew by 5.5%.

The prices of agricultural and fishery products in November 2021, compared to the same month in 2020, increased by 30.5%, the Statistical Office of Serbia reported (RZS). Observed by main product groups, compared to the same month previous year, the greatest impact in price growth was recorded in the following groups: vegetables (55.4%), cereals (39.7%), and industrial plants (37.5%). Between January to November 2021, the prices of agricultural and fishery products increased by an average of 20.3% compared to the same period in 2020. The monthly inflation in Serbia was 0.4% in December, and the y-o-y inflation was 7.9%, the RZS stated. In 2021, compared to the previous year, consumer prices that measure inflation increased by an average of 4%.

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