Serbian companies are becoming more willing to raise their selling prices over the coming year even as headline inflation falls sharply and expectations for input costs remain broadly unchanged, pointing to a widening gap between the current inflation picture and corporate pricing behaviour.
Annual consumer-price inflation fell to 1.9% in July 2026, moving below the 3% midpoint of the National Bank of Serbia’s target range. The central bank has also lowered its inflation outlook after price growth proved weaker than previously expected.
Yet companies appear considerably less convinced that the period of elevated price pressures is over.
According to the latest survey of inflation expectations, 53% of Serbian companies expect to increase the prices of their products or services over the next 12 months, up from 47% in June.
The increase is particularly notable because expectations concerning companies’ own input costs have not moved in the same direction. Only 33% of businesses expect raw-material prices and operating costs to increase over the coming year, unchanged from the previous survey.
The divergence creates an unusual pricing signal. A growing share of Serbian businesses plans to raise output prices even though the proportion expecting higher input costs has remained stable.
That does not necessarily mean companies are simply increasing profit margins. Wage pressures, accumulated cost increases from previous inflationary periods, financing costs, uncertainty over energy and commodity markets, and the need to rebuild margins compressed during earlier price shocks can all influence future pricing decisions.
But the numbers suggest that falling headline inflation is not yet translating directly into expectations of stable corporate selling prices.
Short-term pricing pressure is easing
The picture is more moderate over shorter horizons.
The proportion of businesses expecting to increase their selling prices in the next three months fell from 36% in June to 28% in July.
Expectations for near-term input costs were unchanged, with 23% of companies expecting an increase.
This suggests that businesses recognise the immediate disinflationary environment but remain more cautious when looking further ahead.
In other words, companies appear less likely to implement immediate price increases but increasingly expect that they will have room — or need — to raise prices at some point during the coming year.
That distinction matters for Serbia’s inflation outlook.
If companies delay rather than abandon planned price increases, current low inflation could prove less persistent than headline figures suggest.
Businesses still expect 5% inflation
Corporate inflation expectations also remain substantially above current measured inflation.
Serbian businesses expect inflation of approximately 5% one year ahead, unchanged for the fourth consecutive month.
Their expectations for inflation two and three years ahead are also around 5%, continuing to move within the 4–5% range seen over the previous year.
The persistence of these expectations contrasts sharply with July’s 1.9% headline inflation rate.
It indicates that businesses still perceive structural price pressures in the economy despite the recent improvement in consumer-price data.
Core inflation provides part of the explanation.
While headline inflation has fallen sharply, underlying inflation remained considerably higher at around 4.5% in July, suggesting that domestic price pressures in services and other less volatile categories have not disappeared.
For businesses setting contracts, wages, budgets and selling prices, core inflation may therefore be a more relevant indicator than headline inflation, which can be heavily influenced by food and energy prices.
The legacy of the inflation shock
The latest survey also points to a longer-lasting behavioural consequence of Serbia’s earlier inflation cycle.
Companies appear to have incorporated higher expected inflation into their normal business calculations even as actual inflation falls.
Once businesses, workers and consumers become accustomed to repeated price increases, pricing behaviour can become more persistent. Companies may build future cost increases into contracts in advance, employees may demand higher wages, suppliers may shorten price-validity periods and buyers may become more tolerant of regular price revisions.
This creates what economists describe as inflation persistence.
The inflation rate itself can decline rapidly, but expectations and pricing practices tend to adjust more slowly.
For Serbia, this could become increasingly important because the economy is entering a period in which domestic costs — particularly wages and services — may matter more than imported energy or commodity inflation.
If labour costs continue rising faster than productivity, companies may seek to offset those increases through higher selling prices even in an environment of stable raw-material costs.
Business conditions remain stable
Corporate sentiment does not indicate that companies are preparing for a major deterioration in the operating environment.
Around 72% of businesses said conditions had remained unchanged during the previous three months, while 67% expect business conditions to remain broadly unchanged over the coming 12 months.
At the same time, expectations for production and turnover have improved.
The share of businesses expecting higher production or sales over the next three months increased from 24% to 29%.
For the next 12 months, the proportion expecting growth increased from 42% to 45%.
The combination of stronger expected activity and greater willingness to raise prices could be significant.
When companies expect stronger demand, their ability to pass higher prices to customers generally improves. This means that future pricing decisions may reflect not only costs but also perceptions of market demand and pricing power.
The July survey therefore suggests that part of Serbia’s future inflation dynamic could increasingly come from demand and margins rather than from another external cost shock.
Financial sector is more optimistic
Banks and other financial institutions have a considerably more benign inflation outlook than companies.
Financial-sector inflation expectations for one year ahead declined to around 3.5% in July, while the composite measure of inflation expectations fell from approximately 4% to 3.7%.
Expectations derived from the August Bloomberg survey also declined slightly to around 3.9%.
Medium-term expectations are even closer to the NBS target.
Financial institutions expect inflation of around 3% two years ahead, while their three-year expectation also remains close to 3%.
The divergence between financial institutions and companies is important.
Banks and financial-market participants generally focus heavily on monetary policy, exchange-rate stability, market indicators and central-bank projections. Businesses are more exposed to wages, supplier contracts, taxation, energy bills and operational costs.
Their different inflation expectations therefore highlight two separate views of the Serbian economy.
Financial markets increasingly see inflation normalising toward the NBS target, while companies remain more cautious about the durability of that decline.
Households remain the most pessimistic
Consumers continue to have substantially higher inflation expectations than either businesses or financial institutions.
Household expectations for inflation one year ahead remained around 10%, with expectations for two and three years also close to 10%.
However, qualitative survey responses show some improvement.
The proportion of households saying prices had increased significantly over the previous year fell from 37% to 30%.
Meanwhile, the share expecting significant price increases over the next 12 months declined from 23% to 15%.
Most consumers now expect prices to increase only moderately or slightly.
This suggests that household inflation perceptions are gradually adjusting, although the numerical inflation expectations reported by consumers remain far above actual inflation.
Serbia’s inflation battle is moving to a new phase
The latest data suggest that Serbia’s inflation challenge is changing rather than disappearing.
The earlier inflation cycle was dominated by energy, food, imported commodities and supply disruptions. Those pressures have eased significantly.
The next phase may be more dependent on domestic factors: wages, service prices, corporate margins, demand conditions and inflation expectations.
That makes corporate pricing behaviour increasingly important.
The fact that 53% of Serbian businesses expect to raise prices during the coming year, while only 33% expect higher input costs, indicates that inflation dynamics can no longer be assessed solely through commodity and production-cost trends.
The central bank may therefore face an increasingly delicate policy balance.
Headline inflation of 1.9% provides substantial evidence that previous restrictive monetary conditions and easing external pressures have worked. But corporate inflation expectations of 5%, persistent core inflation and companies’ growing intention to raise prices argue against assuming that price stability has been permanently secured.
For Serbian consumers, the result may be a period in which inflation remains much lower than during the previous shock but prices continue rising selectively across individual sectors.
For businesses, the environment is becoming less about managing extraordinary external cost shocks and more about managing wages, productivity, margins and competitive positioning.
And for policymakers, the next test will be whether today’s low headline inflation can gradually pull corporate and household expectations downward — or whether those expectations eventually push inflation higher again.
