year is almost unchanged from august. chart 3 inflation projection chart 4 contributions to y - o - y inflation by component ( y - o - y rates, in % ) ( average y - o - y rates, in pp ) - 2 9 12 petroleum products administered prices fruit and vegetables non - food products and services food ( excl. fruit and vegetables ) average y - o - y inflation in quarter ( % ) source : nbs. 9 12 9 12 9 12 - 2 iii iv i ii iii iv i ii iii iv i ii iii iv i ii iii source : nbs. in the real sector, as positive dynamics in most production and service sectors extended into q3, we kept our 2024 gdp growth projection at 3. 8 %. this year ’ s gdp growth would probably be even higher were it not for the negative effects of the drought on agricultural output and electricity production in hydropower plants. let me remind you that, as a result of the regular major five - year revision, 2023 gdp growth was revised up, also to 3. 8 %. one of the text boxes looks into the details of the revision, as well as its effects on economic growth and the gdp shares of key macroeconomic indicators. 3 оf 9 chart 5 gdp growth projection chart 6 contributions to real gdp growth ( y - o - y rates, in % ) ( in pp ) change in inventories net exports government consumption gross fixed capital formation household consumption gdp ( in % ) - 2 - 2 iii iv source : nbs. i ii iii iv i ii iii iv i ii iii iv i ii iii - 4 2017 2018 2019 2020 2021 2022 2023 2024 * 2025 * 2026 * sources : sors and nbs calculation. * nbs estimate. as before, we expect economic activity to accelerate further in the next two years to the range of 4 – 5 %, with a central value of 4. 5 %. the composition of growth for this year changed slightly from august in favour of higher domestic demand growth. private consumption is expected to provide the largest positive impulse in the current and the coming years thanks to a rise in employment and wages, preserved consumer confidence and living standard of our citizens. serbia has been awarded investment grade rating as an additional confirmation that investment confidence has been preserved, so fixed investment will continue to provide robust support to gdp growth. this will also be propped up by the implementation of investments planned under the “ leap into the future – serbia expo

5 % in october. relative to the peak from march last year, inflation was set on a downward path by all of its key components, most of all food prices, whose y - o - y growth since february this year has been constantly lower than headline inflation. core inflation also recorded a sharp fall in the same period, coming down from more than 11 % in march last year to less than half that number, and trending at around 5 % y - o - y over the past months. the level of inflation in the previous months was in line with the projection from the august report, as well as with our projection from a year ago, which you can read about in more detail in one of the text boxes in the november report. due to the negative effects of the drought, the october inflation outturn was slightly higher than anticipated. chart 1 november 2023 inflation projection and its outcome chart 2 headline, core and trimmed mean inflation ( y - o - y rates, in % ) ( y - o - y rates, in % ) consumer prices core inflation trimmed mean ( 15 % ) targeted inflation target tolerance band 10. 2 7. 6 5. 0 3. 8 4. 2 - 2 3 6 source : nbs. 3 6 3 6 3 6 sources : sors and nbs calculation. according to our new central projection, inflation will continue to move within the target tolerance band over the next two years, i. e. over our projection horizon. in the coming period, y - o - y inflation should gradually slow down and approach the target midpoint at the end of next year. the largest contribution to such inflation movements will come from the still restrictive monetary conditions, anchoring of not only medium - term but also of short - term inflation expectations within the target bounds, as well as lower 2 оf 9 imported inflation and the fall of global oil prices, which is expected based on the futures. in addition, we expect real wages to grow in line with productivity, helping core inflation decline and approach the headline rate. relative to the previous projection, the negative effects of the drought on the supply and prices of fruit and vegetables are stronger, and domestic demand has been rising slightly faster. we estimate that this will mostly be offset by a lower global oil price, if it moves in line with the futures, and partly also by subdued imported inflation in the conditions of slower than anticipated recovery in the euro area. taking all this into account, our headline inflation projection for next