The latest inflation expectations survey published by the National Bank of Serbia (NBS) points to continued stability in the country’s inflation outlook despite renewed global energy market volatility and rising geopolitical risks. The survey indicates that short-term expectations have increased among businesses. Medium- and long-term expectations remain within or close to the NBS target framework, reflecting confidence in monetary policy credibility.
In inflation-targeting regimes, expectations can influence wage setting, investment decisions and pricing behavior. When households, businesses and financial institutions expect inflation to stay under control, these decisions tend to be more stable. This helps reduce the risk of inflation becoming self-reinforcing and supports the effectiveness of monetary policy.
NBS target range and latest consumer inflation
The NBS inflation target is set at 3.0%, with a tolerance band of ±1.5 percentage points. This implies that inflation between 1.5% and 4.5% aligns with the central bank’s objectives. Annual consumer inflation reached 3.3% in April 2026, remaining within the target corridor.
The survey results also come after a period when actual inflation largely returned to the target range following Europe’s severe inflation cycle from 2022 to 2024. The April 2026 figure places consumer price growth comfortably inside the band defined by the NBS.
Financial sector expectations vs corporate outlook
The most recent survey shows confidence among financial institutions regarding the inflation path. One-year inflation expectations among financial sector participants stood at 3.8%. Two-year and three-year expectations were close to 3.3% and 3.1%, respectively.
Serbian businesses reported higher short-term expectations than financial institutions. One-year inflation expectations for businesses increased from 4.0% to 5.0%, tied to concerns over operating costs, transportation expenses and energy prices. Medium-term indicators were comparatively stable, with two-year and three-year business expectations also at 5.0%.
NBS policy rate and updated 2026 forecast
The survey was released while the NBS kept its key policy rate at 5.75%. The rate has been unchanged since September 2024. The central bank’s stance reflects an effort to support economic growth while keeping inflation anchored within the target range.
The NBS cited global energy developments as a factor shaping its caution. In its May Inflation Report, it said higher oil prices and geopolitical tensions increased inflation risks versus earlier projections, leading to an upward revision of its average forecast for 2026.
The revised projection calls for average inflation of 3.6% in 2026, compared with previous estimates of 3.3%. Despite these risks, the survey data suggest financial markets continue to trust the central bank’s ability to manage them.
Dinar stability, growth drivers, and EXPO 2027 investment
The broader macroeconomic picture remains supportive, with Serbia’s economy expanding by 3.2% year-on-year in the first quarter of 2026. Growth was driven primarily by household consumption and service-sector activity. Wage growth, pension increases, remittances and consumer lending are also supporting domestic demand while inflation remains sufficiently contained.
NBS projections indicate that household consumption is expected to remain a dominant driver throughout the year. Rising incomes and continued credit expansion are expected to sustain demand even as external conditions remain uncertain. Infrastructure investments linked to the EXPO 2027 development programme are also expected to support economic activity.
Energy prices as key risk for second-half 2026
The main external factor highlighted for the second half of 2026 is energy prices, with oil market volatility identified as the principal risk to Serbia’s inflation outlook. A sustained increase in energy costs would likely affect transportation, industrial production and consumer prices.
The survey results suggest that both businesses and financial institutions view these risks as temporary rather than structural . Stable expectations are also described as reflecting confidence in Serbia’s broader macroeconomic framework, including fiscal discipline, exchange-rate stability and monetary policy credibility .
