August 16 (SeeNews) - Serbia's central bank, the NBS, said on Wednesday it has lowered its medium-term inflation projections for this year and next, due to a weaker-than-expected growth of the consumer price index (CPI) in the second quarter of 2017.
The new medium-term projection is lower than the previous one made in May but inflation is expected to move within the target band of 1.5%-4.5% in 2017 and 2018, the central bank said in its August inflation report.
In addition to the weaker CPI growth, the lowered forecast reflects the reduced marginal costs of importers and lower prices of primary agricultural commodities in the domestic market, with the nominal appreciation of the dinar against the dollar also providing a contribution, compared to the previous projection, the NBS said.
Although oil prices expressed in US dollars were assumed at a somewhat higher level for the end of this year, they are now lower expressed in dinars. On the other hand, somewhat stronger growth of administered prices is assumed for this year compared to the May projection, the NBS said.
Serbia's annual consumer price inflation slowed to 3.2% in July from 3.6% in June, data from the national statistical office showed last week. The country's annual consumer price inflation slowed to 1.2% in 2016, from 1.9% in 2015.