Headline inflation is within the central bank’s target range, although core inflation, energy risks and weakening employment indicators continue to limit the scope for rapid monetary easing.
Serbia’s annual inflation rate stood at 2.7% in June, keeping price growth within the National Bank of Serbia’s target range and reinforcing the country’s broader picture of macroeconomic stability.
Core inflation, which excludes some of the most volatile items, remained higher at 4.6%. The difference suggests that domestic and service-sector price pressures have not disappeared even though headline inflation has moderated.
The National Bank of Serbia expects inflation to remain within its target range during July and August. However, it has warned that energy prices and statistical base effects could push inflation close to, or temporarily above, the upper boundary of the range later in 2026 or in early 2027.
Against that background, the central bank has kept its benchmark interest rate at 5.75%.
The decision indicates that policymakers are not yet prepared to shift rapidly toward looser monetary conditions. Although headline inflation has improved, the authorities remain concerned about global energy markets, imported inflation and the persistence of domestic price pressures.
Serbia’s real gross domestic product increased by 3.2% year on year in the first quarter. The central bank has nevertheless lowered its projection for full-year 2026 growth to approximately 3%.
Credit activity has remained strong despite relatively high interest rates. Domestic lending was growing at 16.4% annually, while the share of non-performing loans remained low at about 2.09%.
Household purchasing power has also continued to improve. Real average wages increased by 8.6% in the January-April period compared with the same months of 2025.
The labour-market picture is less uniformly positive. Formal employment declined by 0.5% in the first five months of the year, while the unemployment rate stood at 8.9% in the first quarter.
The combination of higher real wages and softer employment suggests that consumer spending may continue to support the economy, but that companies are becoming more cautious about recruitment.
The National Bank of Serbia’s next scheduled interest-rate meeting is on August 13. Any decision will depend heavily on energy prices, the inflation outlook and developments in domestic demand.
