Serbian Companies Plan More Price Increases Despite Easing Inflation

Serbian companies are becoming more likely to raise prices over the next year even as consumer inflation continues to decline, according to the latest inflation-expectations survey. Annual consumer-price inflation fell to 1.9% in July 2026, below the 3% midpoint of the National Bank of Serbia’s target range. The central bank has also reduced its inflation outlook after price growth came in weaker than previously anticipated.

Corporate expectations, however, are moving in the opposite direction. The share of Serbian companies expecting to increase prices for their products or services during the next 12 months rose to 53% in July, from 47% in June. At the same time, expectations for higher input costs remained unchanged. 33% of businesses expect raw-material prices and operating costs to increase over the coming year, the same proportion as in the previous survey.

Near-term price expectations are declining

The shorter-term picture is less inflationary. The percentage of companies expecting to raise their selling prices during the next three months dropped to 28% in July, from 36% in June. Expectations for higher input costs over the same period remained at 23%. The figures indicate that companies are responding to the current disinflationary environment in the immediate term, while maintaining more cautious expectations for the longer horizon. Corporate pricing decisions can also reflect factors beyond current raw-material costs, including wages, financing expenses, energy and commodity-market uncertainty, accumulated cost increases and margins affected by earlier periods of high inflation.

Corporate inflation expectations remain at 5%

Businesses continue to forecast substantially higher inflation than the rate currently recorded. One-year corporate inflation expectations remained at approximately 5% in July, unchanged for the fourth consecutive month. Expectations for inflation two and three years ahead also remained around 5%, continuing within the 4–5% range recorded over the previous year.

That compares with July’s 1.9% headline inflation. Underlying price pressures remain higher. Core inflation was approximately 4.5% in July, indicating that price growth in services and other less volatile categories has not fallen as sharply as the headline measure. For businesses setting contracts, wages, budgets and sales prices, this underlying inflation rate can therefore remain an important consideration alongside the headline figure.

Earlier inflation continues to influence pricing behaviour

The survey indicates that businesses have continued to incorporate higher inflation expectations into their planning despite the decline in actual price growth. Companies may account for anticipated cost increases in contracts, while suppliers can adjust price-validity periods and employees may seek higher wages. Such practices can contribute to inflation persistence even after external price pressures have weakened. This dynamic could become more relevant as domestic costs, particularly wages and services, play a larger role in Serbia’s inflation environment. If labour costs rise faster than productivity, companies may seek to compensate through higher selling prices even when raw-material and other operating-cost expectations remain relatively stable.

Companies expect stronger activity

Business expectations do not point to a broad deterioration in operating conditions. About 72% of businesses reported that conditions had remained unchanged during the previous three months, while 67% expected conditions to remain broadly unchanged over the following 12 months. Expectations for production and turnover nevertheless improved.

The share of companies anticipating higher production or sales during the next three months increased to 29%, from 24%. For the coming 12 months, the proportion expecting growth rose to 45%, from 42%. The combination of improving activity expectations and greater willingness to increase selling prices indicates that future pricing decisions may be influenced by anticipated demand as well as costs.

Financial institutions expect much lower inflation

Financial-sector expectations remain considerably below those reported by companies. Inflation expectations among financial institutions for the next 12 months declined to approximately 3.5% in July. The composite measure of inflation expectations fell from about 4% to 3.7%. The August Bloomberg survey also recorded a modest decline, with expectations reaching approximately 3.9%.

Medium-term expectations among financial institutions are closer to the National Bank of Serbia’s target. Financial institutions expect inflation of about 3% two years ahead, with their three-year expectations also remaining near 3%. The gap between businesses and financial institutions reflects different exposures to economic conditions. Financial institutions place greater weight on monetary policy, exchange-rate developments, market indicators and central-bank projections, while companies are directly affected by wages, supplier agreements, taxation, energy costs and operating expenses.

Household expectations remain near 10%

Consumers continue to report considerably higher inflation expectations than either businesses or financial institutions. Household expectations for inflation one year ahead remained at approximately 10%, while two- and three-year expectations were also close to 10%. Qualitative responses, however, showed some improvement in perceptions of price growth.

The proportion of households reporting that prices had increased significantly over the previous year declined from 37% to 30%. The share expecting significant price increases during the next 12 months fell from 23% to 15%. Most households now expect prices to rise moderately or slightly, although their numerical inflation expectations remain well above the current measured rate.

Domestic pressures gain importance as headline inflation falls

The latest survey shows a widening gap between Serbia’s headline inflation rate and expectations among companies and households. The earlier inflation cycle was heavily influenced by energy, food, imported commodities and supply disruptions. As those pressures have eased, domestic factors such as wages, services, demand, margins and inflation expectations are becoming more important to future pricing decisions.

The increase to 53% in the share of companies expecting to raise prices over the next year is particularly notable because only 33% anticipate higher input costs. At the same time, headline inflation of 1.9%, corporate inflation expectations of 5% and core inflation of around 4.5% present different signals about the persistence of price pressures. For businesses, the current environment increasingly centres on managing wages, productivity, margins and demand rather than only responding to external commodity-cost shocks. For policymakers, the evolution of corporate and household expectations will remain an important factor as Serbia’s inflation rate moves further away from the elevated levels recorded during the previous inflation cycle.