NBS: Y-o-y inflation to decline from Q2 and nearly halve at end-2023

BELGRADE - Under its May central projection, the National Bank of Serbia (NBS) expects Serbian y-o-y inflation to strike a downward path from Q2, decline more vigorously in the second half of this year and end the year at almost half of its level in March, when it stood at 16.2 pct.

In the May Inflation Report, presented on Wednesday, the NBS said it expected the inflation’s decline to be supported by "the past tightening of monetary conditions, the weakening of the effects of global factors underpinning past growth in energy and food prices, the slowdown in imported inflation, as well as lower external demand amid the expected global slowdown."

"Almost all cost factors from the international environment are likely to influence a gradual slowdown in inflation in the coming period. The key assumptions behind the expected downward trajectory of inflation are the movement of primary commodity prices in line with futures and a further reduction in inflation globally, notably in the euro area," the central bank noted.

"The dissipation of pressures based on imported inflation on prices in Serbia during the projection horizon is one of the important drivers of the inflation’s projected return to the target," it also said.