Serbia entered the second half of 2026 with consumer-price growth returning within the National Bank of Serbia’s target framework, although underlying inflation pressures continued to present challenges. Annual inflation reached 2.7% in June, moving below the 3% midpoint of the NBS target range of 3% ±1.5 percentage points.
The latest figure marks a substantial reduction from the stronger inflationary pressures seen earlier in the decade. However, the structure of price movements indicates that the decline in headline inflation has not been matched across all categories.
Fuel and Food Prices Drive Recent Inflation Movements
Changes in energy and food prices played a major role in shaping Serbia’s inflation path during the spring and early summer. Fuel prices rose by nearly 11% between March and May, contributing approximately one percentage point to inflation before the impact eased in June. In contrast, food prices declined as increased availability of seasonal fruit and vegetables improved supply conditions, reducing their contribution to overall consumer-price growth. The combination of lower food-related pressures and the moderation of energy effects helped bring annual inflation down to 2.7% in June.
Core Inflation Highlights Continued Service-Sector Pressure
While headline inflation returned to the target range, core inflation remained significantly higher. Inflation excluding food, energy and regulated prices stood at 4.6% in June, reflecting continued pressure from service-related costs.
Services remained the main source of persistent inflation. Unlike food and fuel prices, which can respond quickly to changes in agricultural output and international commodity markets, service prices generally adjust more gradually due to the influence of wages, rental costs, domestic demand and operating expenses. The gap between headline and core inflation shows that Serbia’s process of reducing inflationary pressures is still ongoing.
Inflation Expectations Remain Stable as NBS Maintains Policy Rate
Inflation expectations have remained relatively contained. A survey conducted among financial-sector participants by Ninamedia showed expectations of 3.6% inflation over the next 12 months, while Bloomberg’s July survey indicated expectations of 4%. Expectations over longer two- and three-year periods remained within the 3%–3.5% range, allowing the central bank to continue monitoring economic developments without immediate pressure from deteriorating confidence among households or financial markets. Despite the decline in headline inflation, the National Bank of Serbia (NBS) kept its key policy rate unchanged at 5.75% in July.
Central Bank Monitors Energy, Agriculture and External Risks
The NBS maintained a cautious approach due to risks that could influence future inflation trends. Its official forecast expects inflation to remain below the target midpoint during July and August, before moving closer to, or temporarily exceeding, the upper limit of the target range in late 2026 and early 2027. Potential sources of renewed volatility include base effects, energy prices, agricultural conditions and geopolitical developments.
The central monetary-policy challenge has shifted from reducing headline inflation toward ensuring that lower inflation becomes sustained across service prices and other wage-sensitive categories. The pace of future policy adjustments will depend on balancing strong domestic demand against the need to avoid weakening investment activity. A faster-than-expected easing of monetary conditions could increase demand pressures, while prolonged restrictive policy could weigh on economic activity.
Serbia Faces Next Stage of Inflation Management
Serbia’s disinflation process has achieved a significant reduction in overall price growth, but further progress will depend on several domestic factors. Wage increases will need to become more closely aligned with productivity growth, inflation expectations must remain stable, and potential energy-related shocks will need to be prevented from spreading into broader price formation.
