INFLATION is not a big danger while it is single-digit, it amounted to 6.6 percent in Serbia in October, but the problem is if it becomes double-digit, economist Ljubodrag Savic said today.
Photo: Tanjug
Speaking on TV Tanjug, Savic said that inflation has two components – real and psychological, adding that the real refers to what is happening on the market, and that it is psychologically more dangerous because people buy and create stocks en masse for fear that certain products will disappear. , thus increasing demand.
– Inflation, while it is in single digits, is not a great danger, the problem is when it gets the other leg, then that other element of inflation begins to function – psychologically. We are currently far from that situation, Savic said.
He points out that it is difficult to say what will happen with inflation by the end of the year, because, as he states, “you never know” with it.
Savic adds that the state can influence the movement of inflation to some extent, but warns that it must also think about that “psychological component”.
He explains that product prices can be controlled by reducing customs duties, tax burdens or freezing prices, as is done with bread.
However, he adds, the psychological component cannot be easily controlled, because when consumers estimate that a product will not be enough, they buy more and calculate that when they come to the store next time, the price will be higher.
– In that way, they increase the demand and create conditions for the price to jump again, said Savić.
He says that the increase in inflation was influenced by the increase in energy prices, and that inflation leads to an increase in other prices as well.
He points out that, for example, the price of iron has increased by 140 percent, adding that this material is important in housing, which is one of the sectors that pulls our GDP.
– That is why the prices of apartments are going up, Savić said.
He points out that the world economy experienced a great disturbance during the pandemic, because once normal forms of cooperation became difficult.
Savic points out that, for example, 95% of batteries are produced in three countries, China, South Korea and Japan, and during the pandemic, the transport of goods to Europe was difficult, which increased costs.
He also reminded of the problem created by the truck in the Suez Canal.
– Such things affect the increase of costs, but also the prices of products, concluded Savić.
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