Financial-sector outlook edges higher
Survey results published by the National Bank of Serbia show that financial-sector inflation expectations for one year ahead increased from 3.5% in April to 4.0% in May, according to the Ninamedia survey. Expectations for two years ahead rose from 3.3% to 3.5%, while three-year expectations were unchanged at 3.1%.
- Financial-sector outlook edges higher
- Corporate inflation forecasts held at 5% for May
- CPI remains within tolerance while expectations stay elevated
- Divergence between banks and companies reflects cost pressures
- Earnings risks tied to energy, food and labour costs
- IMF projections keep Serbia’s inflation debate tied to external factors
- Dinar stability supports imported prices but not domestic pressures
- Lending considerations as banks factor higher expected inflation
- NBS rate-cut timing depends on whether expectations stay split
- Wage bargaining and fiscal planning face second-round risks
- CPI versus perceived inflation affects households’ responses
- NBS expectation monitoring since 2015 tracks potential self-reinforcement
- Status quo shows no loss of control but disinflation is not complete
A separate Bloomberg survey also pointed upward for the same segment. Financial-sector expectations for one year ahead rose from 3.8% in May to 4.0% in June, aligning with the Ninamedia result. The two surveys therefore show the same direction for near-term expectations among financial institutions.
Corporate inflation forecasts held at 5% for May
The corporate sector showed a different pattern, with business representatives keeping short-term and medium-term inflation expectations unchanged at 5.0% in May. The NBS said this implies that companies expect price growth over one, two and three years to remain above the central bank’s midpoint target.
The central bank noted that corporate expectations have stayed within a corridor of 4.0% to 5.0% over the past year. The stability indicates that firms have internalised a higher expected inflation environment even though the official target band remains 3.0% plus or minus 1.5 percentage points.
CPI remains within tolerance while expectations stay elevated
The latest data indicate that actual consumer-price growth is still within the central bank’s tolerance range. Annual inflation was reported at 3.5% in May after 3.3% in April, with monthly price growth of 0.3%.
The NBS focus is on how expectations feed into business decisions rather than only on the current CPI reading. Inflation expectations are linked to price-setting, wage negotiations, supplier contracts, loan pricing, investment decisions and public-sector wage pressure. When companies plan around a 5.0% inflation assumption, that expectation can become part of the pricing process.
Divergence between banks and companies reflects cost pressures
The NBS described credibility as a key issue, noting that temporary deviations can be tolerated if households, companies and banks believe inflation will return to target. The challenge increases when expectations rise further or remain close to the top of the tolerance band. Financial institutions appear relatively anchored, with one-year expectations at 4.0%, while three-year expectations are close to the midpoint.
Banks and market participants typically respond more directly to central-bank communication, exchange-rate stability, policy-rate signals and official forecasts than to day-to-day operating costs. Companies, by contrast, are more directly affected by invoices, wages, transport costs, energy bills, raw materials, supplier behaviour and their ability to pass costs on to customers.
Earnings risks tied to energy, food and labour costs
The NBS highlighted several cost-related risks affecting corporate expectations more directly than financial-sector models. Energy prices remain a key risk following global oil and gas volatility in early 2026. Electricity tariffs are moving gradually toward more cost-reflective structures under fiscal and energy-sector reforms pressure.
Transport costs are sensitive to fuel prices, geopolitical disruptions and regional logistics bottlenecks, while food prices depend on weather conditions, agricultural output and imported inputs. Labour costs continue to rise as companies compete for workers in a tight employment market.
IMF projections keep Serbia’s inflation debate tied to external factors
The IMF has warned that Serbia’s inflation path remains exposed to global energy and commodity costs. In its latest programme context, it projected average consumer-price growth of around 3.5% in 2026 and 4.5% in 2027.
This framework connects monetary policy with fiscal discipline, wage and pension rules, energy-price reform and monetary caution. If fiscal policy is loosened while energy prices rise and businesses expect 5.0%% inflation, the NBS would have less room to ease monetary conditions without risking credibility.
Dinar stability supports imported prices but not domestic pressures
The dinar exchange rate remains another stabiliser used as part of Serbia’s nominal anchor alongside the policy rate. The NBS approach relies on exchange-rate stability to reduce imported inflation and help contain inflation expectations in an economy where many prices and savings decisions are euro-referenced.
A stable currency does not remove domestic sources of price pressure, including wages, administered prices, energy tariffs and service-sector margins that can keep inflation elevated even when the exchange rate is steady.
Lending considerations as banks factor higher expected inflation
The business-sector expectation of 5.0%% is above the level associated with full confidence in a return to the central bank’s midpoint target. The NBS said this suggests companies may be building price buffers into contracts and planning assumptions across retail pricing adjustments, construction contingencies and manufacturing contract terms such as indexation clauses.
The NBS also said rising inflation expectations affect lending through assumptions about future interest rates and funding costs, household affordability calculations based on nominal wage growth versus real purchasing power uncertainty, and corporate credit risk where firms cannot pass higher costs to customers.
NBS rate-cut timing depends on whether expectations stay split
The monetary-policy question is whether the NBS can continue waiting as Serbia’s key-rate environment remains cautious while external risks are elevated. If expectations remain around 4.0%% in the financial sector and 5.0%% in the corporate sector, pressure for rapid rate cuts weakens because premature easing could validate higher expectations.
The central bank also faces trade-offs because keeping rates high for too long can weigh on investment, housing loans, consumer credit and corporate financing costs.
Wage bargaining and fiscal planning face second-round risks
The NBS said public-sector wage and pension policy is another channel through which expectations matter for wage negotiations since workers negotiate based on expected future living costs rather than only current inflation levels. If expectations remain elevated after headline inflation moderates, pressure for nominal wage increases can persist.
This creates a second-round risk where wages rise to compensate for expected inflation and companies raise prices to cover higher labour costs, contributing to more persistent inflation outcomes.
CPI versus perceived inflation affects households’ responses
The signal for consumers is described as mixed because annual inflation of 3.5%% is below earlier peaks and Serbia is not described as being in a price spiral. However, households may not perceive normalisation if food, energy, rents, services and household costs continue rising faster than headline averages.
The NBS noted that households tend to remember price levels rather than only price growth rates; even if annual inflation slows, higher price levels remain embedded in household budgets.
NBS expectation monitoring since 2015 tracks potential self-reinforcement
The NBS said monitoring expectations is important because credibility affects behaviour among businesses and consumers when they believe prices will continue rising at elevated rates. Such beliefs can change purchasing timing, contract renegotiation frequency, wage demands and trust in nominal prices.
The central bank has published monthly expectation surveys since 2015, describing them as forward-looking indicators of whether inflation could become self-reinforcing through planning horizons set by firms and households.
Status quo shows no loss of control but disinflation is not complete
The latest data do not indicate loss of control because financial-sector expectations remain within the official target band and actual inflation stays inside the tolerance corridor. However, upward movement among financial institutions alongside sticky corporate expectations at 5.0%% suggests disinflation is not complete.
The next stage depends on energy prices, administered-price decisions, wage growth, food prices and fiscal-policy credibility as these factors influence both measured inflation outcomes and expectation formation across sectors.
