Serbia’s annual inflation slowed to 1.9% in July, driven largely by lower food prices, while core inflation remained elevated at 4.5%, pointing to continued pressure in services, housing and utilities. Consumer prices declined 0.2% month on month in July, following increases of 0.2% in June and 0.3% in May, according to the September edition of the Macroeconomic Analyses and Trends bulletin. Annual inflation fell from 3.5% in May to 2.7% in June and 1.9% in July.
Food prices drive the decline
The reduction was largely attributable to volatile price components, particularly fresh food. Overall food prices were 7% lower year on year in July, reflecting a strong agricultural season and a high comparison base. Vegetable prices dropped 16.6%, while fruit and nut prices declined 19.5%. Meat and meat products were 4.5% cheaper than a year earlier. Fresh tomato and pepper prices recorded particularly sharp monthly declines. The trend in underlying inflation was considerably different. Annual core inflation, excluding food, energy, alcohol and tobacco, stood at 4.5% in July, compared with 4.6% in June.
Services and housing remain under pressure
Several service and administered-price categories continued to record significant annual increases. Healthcare prices rose 7.9%, while water supply and waste-related charges increased 16.7%. Actual rents were 12.5% higher than a year earlier, while restaurant and café prices increased 7.4%. Tourist package prices recorded an annual increase of 23.2%.
Energy-related costs also remained elevated. Electricity prices increased 9.6% year on year, while diesel prices rose 12.8% and petrol prices 10%. Solid fuel prices, led by firewood, were 8.8% higher than a year earlier.
Headline and core inflation diverge
The sharp decline in headline inflation provides relief for household purchasing power and reduces immediate pressure for tighter monetary policy. At the same time, the persistence of higher core inflation, particularly across services, housing, utilities and other domestic price categories, shows that inflationary pressure has not eased uniformly. Food prices therefore remain a major factor behind the recent decline in headline inflation, while the durability of that improvement will depend on subsequent agricultural conditions and energy costs.
