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In 2014 higher prices in Serbia

In 2014 higher prices in Serbia

By Milos Mitrovic – Belgrade

Due to rising VAT lower rate from eight to ten percents, many foodstuffs in Serbia will be more expensive in 2014, including bread, milk, flour and meat. The prices will be also affected by higher petrol excise. Additionally, the rise of public transportation prices is expected.

Research by Consumers Association showed that prices of 33 from 50 statistical foodstuffs went up for 12 percents in April-December 2013 period. However, further price increases will be followed by both higher cost of gasoline and electricity.

Vera Vida from Consumers Association told National Television (RTS) that an average Serb would be refraining to buy meat products owing to fact that its prices had grown uppermost.

At the same time, government expects that VAT increase will affect prices “minimally”. In that sense, the food basket price – consisted of the most needed products – is expected to rise for some 150 dinars, which is slightly above one euro. Nevertheless, Vera Vida is skeptical.

“How will this (VAT increase) affect food basket? I truly believe that food basket is very different from the statistics. Life is one thing, statistics is another and I do not believe that consumers will heave reasons to be happy in 2014”, Vida emphasized.

According to RTS, “all eyes are on merchants” who may take the part of the bargain. However, it is more likely that the increase of prices will be followed by both lower demand (up to 7.5 percents) and the emerging of new merchant chains.

Economist Sasa Djogovic believes that food basket will be more lightweight and that lower procurements by merchants are expected.

„Due to lower demand merchants will not have any maneuver room to increase the prices. They will rather have to reconsider their own margins in order to preserve the actual turnover level. At the same time, turnover level will decline”, Djogovic specified.

Serbian economists say that the preservation of the actual standard of living may be the good news in 2014. However, slightly improvement can be expected in 2015.

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