Governor of the National Bank of Serbia (NBS) Dejan Soskic said Monday that that the annual inflation rate in Serbia would drop to single digit level at the end of September.

“Inflation in Serbia has stopped and now it is just a matter of time when the inflation measured annually will return to the inflation target,” the governor said, adding that the inflation rate in the third quarter level would be zero or even negative.

“We have been announcing that we expect the inflation to return to the inflation target in the first half of 2012, but it is possible that this could happen even earlier, perhaps in the first few months of next year,” Soskic told Tanjug.

“If there be no major disturbances and unexpected risks, we will have rapid inflation decline in the near future and proportionally, we will have enough space to make our monetary policy less restrictive, or to cut the benchmark interest rate,” said the NBS governor.

Soskic recalled that the current, third quarter, has seen absence of inflation, starting from June, when a negative monthly inflation rate of -0.3 percent was chalked up, and in July also, when the negative inflation rate was -0.5 percent.

“We already have two months of the third quarter with a negative inflation rate and the next month might even see a zero and maybe even a negative inflation. Therefore, it is likely that the entire third quarter in our country will have not only zero inflation, but possibly a negative inflation as well,” the central bank's governor said.

"Our projections are such that we expect the annual inflation rate in August to be below 11 percent, and in September we expect to enter the zone of single-digit inflation and so on toward the inflation target,” Soskic said.