Serbia’s annual inflation rate declined to 2.7% in June 2026, down from 3.5% in May, as lower food prices reduced overall consumer price growth. Costs related to energy, transport and household services continued to increase, creating a divergence between headline inflation and the broader operating environment for businesses and consumers.
Consumer prices rose by 0.2% month on month in June. The main factor behind the annual slowdown was the decline in prices of food and non-alcoholic beverages, which decreased by 3.7% compared with June 2025.
Food Prices Drive Overall Inflation Decline
Food and non-alcoholic beverages represent 31.64% of Serbia’s consumer basket, giving the category a significant impact on the overall inflation calculation. The reduction in food prices was sufficient to offset increases recorded in several other major spending categories. However, the broader cost environment remained under pressure, particularly for sectors exposed to energy and transportation expenses. Prices for housing, water, electricity, gas and other fuels increased 9.5% year on year, while transport costs rose 7.7%. These categories account for 13.70% and 12.74% of the consumer basket, respectively.
Energy Costs Limit Monetary Policy Flexibility
The National Bank of Serbia has maintained its key policy rate at 5.75% following the latest inflation data. The lower headline inflation rate reduces the immediate need for additional monetary tightening, but continued energy-related price pressures limit the potential for rapid interest-rate reductions. Higher energy costs continue to affect production expenses, transport prices and inflation expectations, while Serbia remains exposed to changes in imported oil prices. The central bank expects inflation to move closer to the upper end of its 1.5–4.5% target range later in 2026 due to base effects. A sustainable return within the target range is projected by mid-2027.
Business Costs Remain Above Headline Inflation
Although lower food prices improve household purchasing power, particularly for lower-income consumers, the impact is partly offset by higher utility and mobility expenses. Companies operating in construction, manufacturing, agriculture, logistics and retail continue to face cost pressures that are not fully reflected in the headline inflation figure.
The hospitality sector also shows uneven price trends. Restaurant and hotel prices increased 5.6% year on year in June. Within the category, food served in restaurants rose 7.2%, alcoholic beverages increased 6.8%, and non-alcoholic beverages climbed 6.4%. At the same time, accommodation prices declined by 1.8%, indicating that hospitality operators have maintained stronger pricing capacity in food and beverage services than in hotel room rates. The latest inflation data show a reduction in overall price growth, while energy-intensive industries and transport-dependent businesses continue to operate under a significantly higher cost environment than the national inflation rate alone indicates.
