Serbian inflation to return to 1.5%-4.5% band in May - c-bank

Serbia's annual inflation slowed down to 5.6% in February, from January's 6.4% and December's 7.6%, thanks to slower growth in food prices, latest available official data showed.

"The [NBS'] Executive Board expects inflation to decrease further and return within the target band probably in May this year, which is somewhat earlier than envisioned by the February inflation projection. Inflation should approach the target midpoint by year-end and hover around that level in the medium term," NBS said in a statement on Thursday when deciding to keep its repo rate unchanged at 6.5% for the ninth month in a row.

"Such inflation profile will be underpinned by the past monetary policy tightening, the slowdown in imported inflation, persistently weak external demand and the expected further drop in inflation expectations, which in the case of the financial sector are now within the NBS target band also for one year ahead," the statement read.

Last month, NBS noted that the year-ahead inflation expectations of the Serbian financial sector fell to 4.2% in February from 4.5% in January, remaining within the central bank's target range of 1.5-4.5% for a second month in a row. The year-ahead expectations of the corporate sector also declined - to 6.0% in February from 6.7% in January.