The Serbian government, led by President Aleksandar Vučić, has announced plans to reduce prices on thousands of products, primarily food, by 15–20% starting this fall. The measure aims to achieve lower prices by limiting trade margins to 20–22% for selected product categories, including soft drinks, fruit and vegetable processing, fresh and processed meat, and fish. Vučić referenced Hungary, Romania, and North Macedonia as examples of countries that have successfully implemented similar margin reductions.
Economists, however, caution that administrative measures like this are unlikely to regulate the market effectively in the long term. Goran Petković, a professor at the Faculty of Economics, argued that while such interventions may have short-term effects, they do not address the underlying factors driving high prices. He warned that price caps historically lead to shortages and the emergence of black-market activity when businesses are unable to cover costs.
Ljubodrag Savić, another economics professor, noted that traders can manipulate reported costs to maintain profit margins, reducing the intended impact of the measure. He emphasized that consumers, through awareness and coordinated action, could exert more influence on market prices than administrative controls.
Experts also highlighted potential consequences of Vučić’s plan. Reducing margins on certain products may cause businesses to raise prices on other goods not affected by the measure. High-cost items could become scarce if retailers are unable to maintain profitability, which could, in turn, stimulate black-market sales. Historical experience shows that similar administrative controls in Serbia and other countries have generally failed to provide sustainable results.
Two years ago, government officials, including then-Minister of Trade Tomislav Momirović, warned against interfering with trade margins. Momirović stated that controlling prices in a democratic market could harm the economy and reduce long-term growth, citing past failures of such measures in Serbia during the 1980s, 1990s, and 2008–2012. At that time, margins had increased by 36% over four years, but officials believed market regulation by the state was not the solution.
Vučić’s announcement comes amid a backdrop of regional examples. Romania has temporarily limited trade margins to 20%, Hungary capped margins at 10% for 30 basic food items, and North Macedonia imposed limits of 5–10% for certain food groups, though these measures lasted only a few months. In Serbia, previous populist interventions, such as campaigns to reduce prices on hundreds of products, were implemented but had limited or temporary impact.
Meanwhile, unresolved issues persist in the Serbian market. Nearly a year ago, the Commission for the Protection of Competition initiated proceedings against four major trade chains for suspected price-fixing, monitoring 35 products. To date, no resolution has been reported, leaving the public uncertain about accountability or consequences. Experts caution that announcing new price-limiting measures without resolving past cases further complicates the effectiveness of government interventions.
