Serbian President Aleksandar Vučić announced new measures to limit traders’ margins, aiming for a total price reduction of 15 percent. The plan includes capping margins at 20 percent for roughly 3,000 products across 23 categories, covering 24 major retail chains. The regulation, issued via decree rather than law, is set to take effect on September 1 for six months, with additional legislative changes planned later this year to ensure fair market practices.
Vučić stated that the measures target essential goods such as food, beverages, hygiene items, household chemicals, baby products, dairy, oils, bread, meat, and spices. He emphasized that strict enforcement, including market and financial inspections, would minimize fraud and maximize benefits for consumers.
However, economists warn that the measure may have limited long-term effects. Dragovan Milićević notes that similar policies in the past often fail because businesses find ways to transfer losses to suppliers or adjust prices for other products, potentially harming consumers and domestic producers. He highlights that achieving the intended 15 percent reduction is unlikely, particularly given VAT and pre-existing margins.
Professor Goran Petković adds that administrative margin caps are short-term tools prone to circumvention. Retailers may redirect profits by raising prices on non-regulated goods or restricting supply, and enforcement costs could reduce efficiency. Historical experience shows that such interventions often lead to shortages, supply disruptions, and low productivity in marketing channels, while benefiting only certain segments of consumers in the short term.
Experts stress that the new measures primarily target retail chains and do not regulate importers or manufacturers, leaving potentially significant gaps in the market. Overall, while the initiative may temporarily ease costs on some goods, its broader economic impact is expected to be limited, and unintended consequences remain a major risk.
