Macroeconomic Forecast Montenegro

After two years of very low inflation, price pressures are set to rise, and our revised year-end inflation forecasts stands at 3.2% y-o-y (up from our previous projection of 2.1% y-o-y). The change in our outlook is mainly due to a sudden jump in July's inflation figure, increasing by 2.3% m-o-m and 4.7% y-o-y. Given that the surge was caused by a hike in electricity prices, we are not overly concerned by the developments. Nevertheless, on the back of rising food prices and anticipated increases in telecommunication costs, we believe that inflationary pressures are likely to remain elevated over the coming quarters.

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