Cost-of-living crisis: Serbia to cap food, consumer goods profit margins

BELGRADE: Serbia’s government will order a cap on food and consumer goods profit margins as well as interest rates on cash loans from next week, populist President Aleksandar Vucic said on Sunday, in an attempt to tackle the cost-of-living crisis.

The decrees aimed at raising living standards follow months of daily anti-corruption protests and inflation that rose to 4.9 per cent in July, against the central bank’s target of 3 per cent, give or take 1.5%.

Vucic said that large retailers of food, beverages and other consumer goods will have to keep profit margins around 20 per cent, down from about 40 per cent, or risk hefty fines.

“We are introducing these measures to increase purchasing power and living standards … and (contain) inflation,” Vucic told reporters.

The latest move in Serbia shows how the governments can arrest the trend of worsening cost-of-living crisis amid rising inflation and shrinking purchasing power.

Read more: NEPRA cuts electricity tariff amid rising inflation

Meanwhile, it is the failure of governments in liberal democracies in the developed West to bridge the widening gap between the rich and the poor that is providing space to the far-right element.

People are feeling that their elected governments have become hostage to the big business interests.

BANK LOANS

At the same time, the president also said that commercial banks should cap rates on cash loans to private borrowers to about 7.5 per cent, down three percentage points from the average. The central bank this month kept its benchmark rate unchanged at 5.75 per cent.

The government will adopt the decree next week, Vucic said.

Such decrees are executive orders that do not require parliamentary approval.