Serbia annual inflation eases to 4.5% in May

In April, Serbia's central bank predicted that annual inflation will return to the targeted range of 1.5% to 4.5% already in May, a month earlier than previously expected. Inflation should approach the target midpoint by year-end and hover around that level in the medium term, the central bank has said.

On a monthly comparison basis, Serbia's consumer price index (CPI) increased by 0.4% in May, after rising by 0.7% in April, the statistics office said in a statement on Wednesday.

In annual terms, the prices of food and beverages, which have the biggest weight in the consumer basket, rose by 1.3% in May, considerably slower than April's 2.9% increase, the statistics office data showed.

"Easing of food inflation is the key takeaway from May’s CPI print as food prices contributed by just 0.2pp to overall headline CPI. Easing of food prices largely stems from cheaper vegetables, as the release shows an 11.1% y/y decline in the prices of vegetables, thus shaving 0.9pp of headline CPI," Erste Group analysts said in a note on Wednesday.

Prices of housing, water, energy, and other fuels slowed their annual growth to 5.6% in May from 7.7% in April. However, the increase in transport prices accelerated to 7.1% in May from 4.5% in April, according to data from the statistics office.

In May, the cost of restaurant and hotel services recorded the highest annual growth with prices rising 9.4%, after increasing 9.9% in April. The cost of alcohol and tobacco followed, climbing by 8.7% in May, faster than April's 7.1% increase.

Serbia's December 2023 annual inflation slowed down to 7.6% from 15.1% in December 2022.