Citizens could face new price increases in the coming months, partly due to the consequences of last year's administrative restriction of prices and trade margins.
Decision National Bank of Serbia (NBS) to increase the reference interest rate to six percent indicates the expectation that inflation be higher than originally planned, assessed the editor-in-chief of the Radar weekly Milan Ćulibrk.
He believes that citizens could face new price increases in the coming months, partly due to the consequences of last year's administrative restriction of prices and trade margins.
Appearing on N1 television, Ćulibrk assessed that the increase in the interest rate is a kind of recognition by the central bank that inflationary movements will not take place in accordance with earlier expectations. He reminded that in previous years, the NBS presented inflation to the public as stabilized, which is why he sees today's decision as a significant turn in monetary policy.
The executive board of the NBS decided to increase the reference interest rate by 0,25 percentage points, or 25 basis points, from the previous 5,75 to six percent. At the same time, interest rates on deposit facilities, to 4,75 percent, and credit facilities, to 7,25 percent, were increased.
In explaining the decision, the central bank stated that such a move was influenced by the realized and expected trend of inflation, as well as risks from the international and domestic environment. The goal, as explained, is to prevent significant secondary effects of the energy shock on other prices and preserve price stability in the medium term.
In particular, the NBS pointed to the prolonged uncertainty on the international level due to the conflicts in the Middle East, which affect the global energy market and encourage the growth of oil, natural gas and electricity prices.
Ćulibrk, however, believes that such a move by the central bank was expected and that it could have happened earlier, given the inflationary risks.
One of the reasons why inflation could increase further in the coming period, according to his opinion, is the consequences of last year's decision of the Government of Serbia to limit trade margins on certain products.
Ćulibrk reminded that this measure was introduced in September of last year, assessing that it was motivated by political reasons, and not a long-term solution to the problem of rising prices. He also warned that due to the limitation of margins, a procedure was initiated before international arbitration, which, according to his assessment, the state could lose.
Since the decree was valid until March of this year, Ćulibrk expects that the effects of administrative price restrictions could be manifested through their subsequent growth, which would also be reflected in the official data on inflation. He singled out the period from October this year to March next year as a particularly sensitive period.
Ćulibrk also warned against the possibility that the eventual worsening of economic indicators could be politically attributed to the change of government, although, as he pointed out, the executive power has not changed for the time being.
According to him, it could happen that the opposition leaders will be accused of rising prices, instability of the exchange rate and problems with the payment of salaries and pensions, even though the same people are still at the head of the state. He reminded that Siniša Mali is still the Minister of Finance, Đuro Matsut is the Prime Minister, and that the Government functions in a technical mandate.
Therefore, he believes that a possible increase in inflation should not be automatically presented as a consequence of the arrival of a new government.
Ćulibrk indicated the possibility that the representatives of the previous government would claim that they left the heirs with inflation of four percent, which then increased to six percent due to their incompetence. He rejected such an interpretation with the assessment that it ignores the fact that earlier decisions on administrative price restrictions contributed to the current inflationary pressures.
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