Autumn Brings Price Hikes to Serbia

Under the guise of the 2012 budget revision, Serbia's Socialist-led government has raised prices on items ranging from food to heating.

The wave of price hikes, spanning from three to 40 per cent, has hit household chemicals, alcohol, processed fruits and vegetables, beverages, canned meat and fish, city transportation fares, frozen fruits, confectionery, ice cream, clothing, footwear, and mobile telephony.

The cost of heating went up 18.5 per cent, the cost of diesel fuel is up around 3 per cent, liquefied petroleum gas 20 per cent up and cigarettes are now 10-16 per cent more expensive.

The price hikes are the result of the amendments to the 2012 budget which entered into force on October 1.

According to the revised budget, VAT on non–food items has risen from 18 to 20 per cent while taxes on profits will rise from 10 to 12 per cent next year.

The average salary in Serbia is already low when compared to prices - about €350. Statistics say that the average food basket costs around 55,000 dinars [about €450) for a three-member family per month.

Economist Goran Nikolic said that the rise of some 0.9 per cent in overall prices was to be expected. He however found the increase in food prices unfounded as the food VAT remained at 8 per cent.

The consumer associations also believe there is no economic justification for the latest wave of price increases.

Ljubisav Orbovic, the leader of the Alliance of Autonomous Unions of Serbia, has called on the government to bring back previous prices of basic foods.

"We will give the government some 15 - 20 days to return the prices to the September 1 level, and unless they do so, we will call people to join us in mass protests in all Serbian cities," Orbovic announced on Tuesday.

A significant price hike was also registered in September and included milk and dairy products, cooking oil, flour, pastries, eggs, fruit, juices, chemical and energy products.

The country's Trade Minister Rasim Ljajic has addressed the issue and concurred that some producers used the VAT rate decision as an excuse to hike prices, and announced that the government would "not sit idly" faced with this challenge.