Serbian government caps prices of basic foodstuffs as inflation soars

Serbian government caps prices of basic foodstuffs as inflation soars
By Eldar Dizdarevic in Sarajevo November 30, 2021

The Serbian government decided on November 30 to limit the prices of some basic foodstuffs at the level of November 15. The cap has been introduced in the context of rising inflation, with the aim of preventing market disturbances and avoiding other negative consequences. 

The National Bank of Serbia (NBS) warned at the end of November that inflation will be somewhat higher at end-2021 and in H1 2022 than envisaged in the central bank’s August projection, primarily due to higher vegetable prices, further growth in global prices of primary commodities and cost-push pressure.

Inflation in April-July 2021 was within the planned range, but in August it began to rise and in October consumer prices reached 6.6% compared to the same month last year. 

The price freeze will be introduced for sugar crystals, type Т-400 flour, edible sunflower oil, pork and UHT milk with 2.8% fat, the government statement said.  

The cap on prices will not apply to reduced prices (sales, seasonal discounts or promotional sales) if they were in force on November 15, only to regular prices before discounts are applied. 

The decision, which will be in force for 60 days, stipulates that producers must not deliver these products in quantities lower than the average for the past 12 months. 

For those who violate the rules, fines in the range of  RSD100,000 to RSD2mn (€850-€17,000) are envisaged, and they will also be banned from engaging in economic activity for six months to one year, said the government announcement. 

Following the rapid rise in electricity prices, the government also announced that buyers of electricity on the commercial market whose contracts expire on November 30 will be able to extend the validity of their contracts to December 31. There are plans to take a similar measure for buyers whose contracts with Elektroprivreda Srbije that come into force on December 1.