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Serbia adjusts excise taxes: Impact on consumer prices and business costs

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As of May 1st, Serbia is witnessing adjustments in excise taxes, potentially leading to higher prices for fuel, coffee, cigarettes, and alcohol. While electricity and gas prices have decreased for businesses, consumers may not see a reduction in the cost of various products due to claimed unfavorable conditions by entrepreneurs.

Amidst Serbia’s relatively low household incomes in Europe, there’s a slight silver lining with reduced egg prices, a result of oversupply ahead of the Easter holidays.

The new excise rates, reflecting a 7.6% inflation rate from the previous year, translate to higher fuel taxes by 4.5 to 5.7 dinars. Alcoholic beverages face excise rates ranging from 26.8 to 30.72 dinars per liter, while coffee sees an increase from 108.06 to 405.24 dinars per kilogram. Additionally, e-cigarette liquids now incur a 10.4 dinar excise tax per milliliter.

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Cigarette prices have surged again, with new rates published in the Official Gazette effective from May 7th. While there’s no doubt about tobacco price hikes, the extent remained uncertain, although historically, manufacturers tend to raise prices by 10 dinars per pack.

The objective behind these excise adjustments is to align with EU standards, aiming to collect at least 90 euros per 1,000 cigarettes by 2025. This means Serbia’s cigarette prices will eventually match those in EU countries.

In contrast, economic decisions have led to a 25% reduction in electricity prices for businesses and a 15% drop in gas prices, starting May 1st. Despite the straightforward economic rationale suggesting that energy price fluctuations influence overall pricing, Serbian businesses often resist price reductions, citing various reasons like high inflation, relatively cheaper regional energy prices, and increased minimum wages.

While entrepreneurs argue against price reductions, certain products like eggs have witnessed a decrease in prices due to oversupply, offering some relief to consumers amidst economic uncertainties.

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