Serbian economic growth and inflation trends

The National Bank of Serbia (NBS) reported a slowdown in annual inflation to 1.9 percent in July, which is below the central target of 3 percent. This decline was linked to stabilized food prices and strong agricultural yields.

Simultaneously, Serbia’s real GDP growth accelerated to 3.6 percent year-on-year in the second quarter, driven largely by the service sector, including tourism and trade. Consequently, the NBS revised its annual growth projection upward from 3.0 percent to 3.2 percent. While the bank noted an improved external position, it remains cautious regarding interest rates due to global uncertainties and energy price fluctuations.

In August, Serbia’s annual inflation rate rose slightly to 2.2 percent, remaining below the NBS 3.0 percent target. Monthly consumer prices increased by 0.5 percent, fueled by rising costs for oil derivatives, core inflation components, and fresh meat, the latter of which saw a 4.7 percent increase. The NBS attributed these movements to a “prolonged energy shock and rising global oil prices,” noting that annual energy prices rose by 11.0 percent. Core inflation was recorded at 4.7 percent annually. The NBS expects inflation to rise to approximately 4.0 percent in September, citing a low base effect following previous wholesale trade margin regulations.