Serbia entered the second half of 2026 with household consumption providing strong support to economic growth, as rising wages, expanding retail sales and faster credit growth increased purchasing power despite a sharp decline in headline inflation. Real retail sales rose 8.2% year on year in July, bringing growth for January-July to 7.3%. Household consumption had already increased 4.0% in real terms in the second quarter, contributing to Serbia’s overall 3.8% GDP growth. The strength of domestic demand is supported by a combination of employment income, consumer borrowing and fiscal measures.
Wage growth strengthens purchasing power
Average net monthly earnings reached RSD 120,401 in June, while median net earnings stood at RSD 94,281. During January-June, net wages increased 11.5% in nominal terms and 8.4% in real terms. Real wage growth in June alone reached 9.4% year on year. Credit growth is adding further support to consumption. Lending to the domestic non-monetary sector was growing by around 16.6% year on year in June, adjusted for exchange-rate movements, with household lending expanding faster than corporate credit. Housing-loan interest rates have declined from earlier peaks, while cash loans continue to support consumer spending.
Inflation falls as demand remains strong
Consumer inflation declined to 1.9% in July, compared with 3.5% in May and 2.7% in June. The July decline was influenced significantly by food prices. Prices of food and non-alcoholic beverages fell 2.0% from June, supported by agricultural supply. At the same time, the broader demand environment remained strong. Services continue to face wage-related pressures, while retailers, hospitality businesses, property-related activities and consumer lenders are benefiting from increased purchasing power. Producer costs have also accelerated, creating additional pressure on companies as they determine how much of the increase can be absorbed through margins and how much is passed on to consumers.
Fiscal policy provides additional support
The revised state budget is adding further momentum through higher planned revenues and expenditure, continued capital investment and additional household-support measures. The official 2026 GDP growth forecast has been raised to 3.3%.
Strong retail sales, real wage growth above 8%, substantial credit expansion and major fiscal investment programmes are supporting domestic demand as Serbia moves into the autumn. Household balance sheets and banking-sector asset quality remain comparatively strong, while nominal wage convergence continues.
National Bank keeps rate at 5.75%
The National Bank of Serbia (NBS) has maintained its key policy rate at 5.75%, despite headline inflation falling temporarily below 2%. Wage growth, retail activity, lending expansion and producer-price developments provide a broader picture of inflationary pressures than the July consumer price index alone.
Serbia’s consumer economy remains one of the main contributors to growth heading toward November, supported by rising incomes, credit and fiscal measures, while stronger producer costs and sustained household demand are becoming increasingly important factors for consumer prices during the autumn.
