RS: Inflation in February was 4.5% y/y

Inflation returned to the target band in February, after just missing out at the start of 2025. The figure landed at 4.5% y/y, thus right on the upper end of the target range. The figure was largely in line with our and Bloomberg consensus expectations, at 4.4% y/y and 4.5% y/y respectively.

The first two inflation prints of the year confirm still relatively high inflation pressure in Serbia. Regarding inflation outlook, we expect it will move around the upper end of the target band in 1H25, fall below 4% y/y in July, and decline towards 3.5% y/y as we head towards year-end.

As far as monetary policy moves, we dont expect any changes to the key rate on tomorrows rate setting meeting.