Consumer prices in Montenegro, measured by the consumer price index, increased by 3.4% in April compared to the same month last year, according to data from Monstat. On a monthly basis, prices rose by 0.8% from March to April.
Since September 2023, when the annual inflation rate was 1%, there has been a steady increase, reaching 3.4% in April 2024. According to Vasilije Kostić, President of the Montenegrin Employers Federation and economic analyst, the rise in inflation was expected.
Kostić explained that the current inflation is a direct result of global, regional, and local economic conditions. He specifically pointed to the impact of the government’s economic reform programs “Europe Now 1” and “Europe Now 2,” as well as the fiscal policies of the current administration, which he described as pro-inflationary.
He warned that Montenegro’s strong dependence on imports allows price instability from other markets to directly affect the local economy. This creates a framework for persistent long-term price growth.
Kostić further stated that inflation reflects increased business uncertainty and risk. Even though current inflation is moderate, it still contributes to a deteriorating business environment through higher operating costs.
He emphasized that while inflation might benefit governments in certain cases, particularly with public debt, it is generally harmful to the overall economy. He criticized attempts to portray nominal income growth as a success, when in reality, it often masks a decline in real purchasing power.
Eurostat recently reported an annual inflation rate of 2.2% for the eurozone in April, significantly lower than Montenegro’s 3.4%. Kostić attributed this gap to Montenegro’s domestic policies and structural imbalances, particularly a focus on consumption over productivity.
Monstat also reported that the biggest contributors to monthly inflation in April were price increases in vegetables, clothing, fruit, pharmaceuticals, rent, meat, restaurants, cafes, shoes, and footwear. From January to April, consumer prices were on average 2.9% higher than in the same period last year.
Price increases by category in April compared to March included health (3.1%), clothing and footwear (3%), food and non-alcoholic beverages (1.4%), restaurants and hotels (1.3%), recreation and culture (0.6%), household goods (0.4%), and housing, water, electricity, and fuels (0.3%).
Price declines were recorded in transport (1.4%), alcoholic beverages and tobacco (1%), and communications (0.1%). Other categories saw minimal or no change.
