Serbian Inflation Slows in September, Supporting Policy Easing

Serbian consumer prices rose less than economists predicted in September, adding to chances that the central bank will reduce its benchmark interest rate at a meeting on Wednesday.

Inflation decelerated to 1.4 percent from 2.1 percent in August, the national Statistics Office said on its website on Monday. Price growth fell short of the 1.6 percent median forecast in a Bloomberg survey. The prices of goods rose 1 percent from a year earlier, while services rose 2.9 percent. Compared with August, prices were unchanged after a 0.9 percent increase in August, the data showed.

That “obviously reflected very weak demand,” Ljiljana Grubic, an analyst with Raiffeisenbank AD in Belgrade, said in a note to investors. “Today’s CPI data might be supportive for the NBS to chop the key rate by another 50 basis points to 4.5% at the key rate-setting meeting,” she said.

The National Bank of Serbia, which has lowered its benchmark interest rate six times this year by a cumulative 300 basis points, sees inflation re-entering its target range of 2.5 percent to 5.5 percent by early 2016 at the latest. Price growth has remained below the target since February 2014. The central bank holds its next rate-setting meeting on Oct. 14.

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