Serbian National Bank (NBS) Governor Jorgovanka Tabakovic said on Friday that inflation will stand at 7.9 percent y.o.y. in the first quarter but that it is expected to drop in Q2.

She told a presentation of the NBS monthly inflation report that inflation will drop back to the target 3.5-4 percent by the end of the year.

According to Tabakovic, the NBS projection of GDP growth will remain at 4-5 percent this year. She said that inflation is defined by the rise in the prices of fuels and food which monetary police measures have little or no effect on.

She said that inflation rates are expected to drop due to projections of a good agricultural season with lower international pressure.

The NBS report said that the monetary policy priority will be to maintain price and financial stability in the medium term while supporting economic growth, rising employment and living standards, strengthening exports and preserving the investment environment.