Electricity price hikes and their impact on Serbian households and economy

Electricity prices in Serbia rose twice last year by 8% each time, with another increase of at least 7% planned from October 2025, and further hikes expected next year. A less publicized but significant change is the proposed lowering of the “red zone” consumption threshold from 1,600 kWh to 1,200 kWh, which would push more consumers into a higher tariff bracket, potentially increasing their bills by up to 30%.

Currently, a consumer using 1,600 kWh on a single-phase, single-tariff meter pays about 25,171 dinars monthly. After the change, such consumption could lead to bills as high as 32,856 dinars due to the combined effect of the threshold shift and price increase.

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Experts warn many consumers may not fully understand these changes or monitor their usage, resulting in unexpected higher bills. The Serbian government justifies the increases as necessary to improve the financial health of Elektrodistribucija Srbije (EDS), the national electricity distributor.

Despite legal rights to annual price adjustments reflecting cost changes, political pressure has delayed some increases. Nevertheless, EPS, the national power company, struggles financially even after multiple price hikes and restructuring efforts starting in late 2023.

Electricity prices for households have increased by 34.4% since late 2021, coinciding with energy system disruptions and a period when Serbia had to import electricity, driving inflation. Although EPS made record profits in 2023 (largely due to government compensation for keeping industrial prices low), profits dropped sharply in 2024 and fell below company targets.

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Inflation in Serbia remains high at around 4.6%, with electricity cost increases driving up prices in nearly all economic sectors. Recent removal of food price controls and uncertain agricultural prospects further complicate inflation control.

While a 9.4% hike in the minimum wage has been announced, it is unlikely to keep pace with rising living costs linked to energy price growth. The IMF projects inflation will only return to its 3% target in the medium term.