Serbia’s central bank has maintained its benchmark interest rate at 5.75%, keeping monetary policy unchanged as rising energy prices threaten to accelerate inflation and increase costs for businesses. The decision comes amid continued economic growth, strong bank lending and investment in manufacturing, infrastructure and automotive production.
The National Bank of Serbia (NBS) expects annual inflation to rise from 2.2% in August to around 4% from September, driven by higher oil, gas and electricity prices affecting production, transport and consumer goods. The unchanged rate reflects a cautious approach as policymakers seek to contain price pressures without undermining economic expansion. The central bank retained its economic growth forecasts of at least 3.2% for 2026 and approximately 4.5% for 2027, with domestic consumption and investment expected to support activity.
Industrial Producer Prices Reflect Rising Cost Pressures
Serbia’s industrial producer prices rose 9.6% year-on-year, with manufacturing prices recording a similar increase. Mining producer prices climbed by 38.4%, marking a particularly sharp increase in the extractive sector. Although higher producer prices do not necessarily translate directly into consumer inflation, sustained increases in factory-gate costs can squeeze corporate margins and eventually feed through to retail prices.
The developments are particularly relevant for export-oriented manufacturers, including automotive suppliers, metals processors, construction-material producers and engineering companies. These businesses operate within European supply chains where customers often have significant pricing power, limiting manufacturers’ ability to pass higher energy and transport expenses on to buyers.
Borrowing Costs and Energy Expenditure Affect Investment Decisions
The combination of unchanged interest rates and rising operating expenses could affect companies financing automation, capacity expansion and energy-efficiency upgrades. Energy-intensive industries, particularly metals, chemicals and building materials, face exposure to higher electricity and fuel costs. Serbia’s industrial investment model has traditionally benefited from competitive labour costs, access to European markets and government incentives. Productivity improvements and energy efficiency are increasingly important to maintaining that competitiveness as production expenses rise.
Companies with modern equipment, long-term electricity contracts and stronger balance sheets are better positioned to manage the cost environment. Smaller manufacturers that depend on bank financing and short-term energy procurement face greater exposure to fluctuations in operating expenses and borrowing costs.
Bank Lending Continues to Expand
The NBS decision maintains a relatively stable interest-rate environment for Serbia’s banking sector but postpones the prospect of cheaper corporate loans. Outstanding bank loans reached approximately RSD 4.82 trillion, equivalent to €41 billion, at the end of September, representing annual growth of around 15.7%.
Household lending expanded more rapidly than corporate borrowing, supported by cash loans, mortgages and consumer financing. Credit growth continues to support domestic demand, while its pace reinforces the importance of keeping inflation expectations under control. If energy prices remain elevated, the central bank could have less scope to reduce interest rates even as companies face higher operating and financing expenses. The implications extend beyond manufacturing to property developers, infrastructure contractors and businesses that rely on credit to finance working capital.
Growth Forecasts Differ Between the Central Bank and World Bank
Serbia’s economic activity continues to benefit from public infrastructure expenditure, preparations for Expo 2027 and investment in automotive production. The World Bank projects economic growth of 3.1% in 2026 and 3.7% in 2027, below the NBS forecasts. The difference between the projections reflects uncertainty surrounding the strength and sustainability of the recovery.
Higher inflation would not necessarily prevent companies from investing, but it could affect the financial viability of individual projects. Businesses with predictable revenues, strong export contracts and efficient production systems would be better positioned than those dependent on inexpensive credit or low operating costs.
The next consumer inflation figures will indicate whether the September increase in industrial producer prices is extending into the wider economy. For the NBS, the challenge remains containing inflation while avoiding unnecessary restrictions on investment. For Serbian manufacturers, the key issue is whether productivity gains can compensate for rising energy and operating costs while borrowing rates remain elevated.
