Governor of the National Bank of Serbia (NBS) Jorgovanka Tabaković stated that Serbia’s inflation slowdown to 2.8% in October was largely driven by the government’s decree capping retail margins. Presenting the Inflation Report – November 2025, she explained that inflation would have continued to ease even without the decree, and is expected to remain within the NBS target band in the coming period.
Tabaković highlighted that out of 167 food products included in the inflation basket, 147 recorded price decreases in September. As a result, year-on-year food and non-alcoholic beverage inflation fell to 1.7%, down from 7.8% in August. According to the latest NBS projection, inflation will stay at or below the central target level through the duration of the margin cap—until the end of this year and early next year. Inflation is expected to remain within the 3% ± 1.5 p.p. target throughout 2026, though a low base effect from September this year may push inflation toward 4% at the end of 2026.
She noted that inflation will continue to move within the target range thanks to the effects of the margin decree, improved market regulation intended to prevent unfair practices, easing global cost pressures, and a potentially better agricultural season that could lower fruit and vegetable prices. Rising wages and higher disposable income may push in the opposite direction, but the governor stressed that this should not generate major inflationary pressure because wage growth is expected to be matched by productivity gains.
GDP growth in the third quarter reached 2% year-on-year, below the NBS projection. Despite continued growth in automotive production and exports, the services sector recovered more slowly than expected and construction activity declined. The new NBS forecast projects 2.1% GDP growth for 2025 and 3.5% in 2026. Growth in 2026 will be driven mainly by domestic demand — higher consumption supported by rising wages, pensions, and favorable credit conditions — as well as increased investment, particularly through infrastructure projects under the “Leap into the Future – Serbia EXPO 2027” program.
Tabaković stressed that Serbia is also facing external challenges, including the imposition of sanctions on NIS due to its majority Russian ownership, and the possibility that the EU may reduce steel import quotas to protect its own industry. She expressed hope that Serbia will maintain positive growth prospects thanks to sound economic policy, strong fundamentals, and accumulated buffers.
Foreign direct investment inflows reached €2.5 billion in the first nine months, lower than last year. Tabaković noted that this decline mirrors trends across the region and is linked to global uncertainty, tightening trade policies, and geopolitical tensions. She added that one-off inflows recorded last year and domestic political tensions also contributed to delays in some investments.
