Serbia’s annual inflation rate declined to 2.7% in June 2026, placing overall price growth within the National Bank of Serbia’s (NBS) target range, but the central bank continues to maintain a cautious approach due to persistent core inflation, energy-related risks and labour-market developments.
Although headline inflation has moderated, underlying price pressures remain stronger. Core inflation, which excludes certain volatile categories, reached 4.6%, indicating that domestic and service-sector price increases continue to influence the economy.
NBS Keeps Interest Rate at 5.75%
The National Bank of Serbia expects inflation to remain within its target range during July and August 2026. However, the central bank has warned that changes in energy prices and statistical base effects could push inflation near, or temporarily above, the upper limit of the target range later in 2026 or in early 2027.
In response to these risks, the NBS has maintained its benchmark interest rate at 5.75%. The decision reflects continued caution among policymakers despite lower headline inflation, with attention focused on global energy markets, imported inflation pressures and the persistence of domestic price increases. Serbia’s economy recorded 3.2% year-on-year GDP growth in the first quarter of 2026, although the central bank has reduced its projection for full-year economic growth to around 3%.
Lending Growth Continues Despite Higher Rates
Credit activity in Serbia has remained resilient despite elevated borrowing costs. Domestic lending increased by 16.4% annually, while the proportion of non-performing loans remained low at approximately 2.09%. Household income indicators also showed continued improvement. Real average wages grew by 8.6% during the January-April 2026 period compared with the same period a year earlier. The improvement in real wages has supported consumer purchasing power, although employment indicators have shown weaker trends.
Employment Indicators Show Mixed Economic Signals
Formal employment decreased by 0.5% during the first five months of 2026, while Serbia’s unemployment rate reached 8.9% in the first quarter. The combination of rising real wages and weaker employment growth indicates that consumer demand may continue contributing to economic activity, while companies appear more cautious regarding workforce expansion. The National Bank of Serbia’s next scheduled interest-rate meeting is set for August 13, 2026. Future monetary policy decisions will depend on developments in energy prices, inflation trends and domestic demand conditions.
