Serbia's economic outlook remains uncertain, not only because of a continued drop in income per household, but also because of a general rise in prices of food and fuel, affecting consumer trust and discouraging potential investors, according to the latest report from Dun & Bradstreet (D&B).

D&B still puts Serbia among countries with moderate business risk. The only country in the region with a lower rating than Serbia is Bosnia-Herzegovina.

Import prices will put more pressure on the dinar as it loses ground against the U.S. dollar, so D&B raised its inflation prognosis to 10 percent in 2011 and 8 percent in 2012 with a potential of further increase.

The consumer prices inflation jumped to 11.2 percent in January compared to the same month last year. The average rate is 6.4 percent.

According to the Statistical Office of the Republic of Serbia, January average salary went up by 13.8 percent nominally compared to the same month 2010.

The various taxes related to salaries also increased, by 13.6 percent, so there was no improvement.

A research by the Blic daily shows that a consumer basket made up of six food items (sugar, flour, meat, potatoes, sunflower oil and milk) went up from RSD 835.40 in January 2009 to RSD 1089 in January 2011, which is a 30 percent increase.

The adopted reforms, including privatization and restructuring within certain companies, should help keep Serbia's export competitive even with the high inflation. This means that Serbia could benefit from better export despite D&B's expectations of a drop in demand on key markets this year.

Studies have shown that the government has been able to collect only about 30 percent of its taxes, which raises the fiscal deficit and could cause problems even in government companies.

Germany and Switzerland have the highest rating, while Slovenia is the best in the region followed by Croatia, Bulgaria, Romania, Albania, Hungary, Macedonia and Greece.

Since the beginning of 2011, the central bank has intervened in the interbank foreign exchange market only once when it purchased EUR 5 million in order to ease excessive daily volatility of the exchange rate.