The expiration of Serbia’s retail-margin controls has not produced the price surge that many consumers and policymakers feared. Several months after the measure ended, the National Bank of Serbia found that around 75% of the products covered by the regulation were still cheaper than before the restrictions were introduced.
The result is important because the margin cap was always a temporary administrative intervention. The central question was whether retailers and suppliers would rapidly rebuild margins once the regulation expired, producing a second inflation shock. The NBS’s detailed review suggests that this rebound has so far been surprisingly limited.
The regulation operated from September 2025 to February 2026. Across all products covered, prices fell 5.2% during the period in which the measure was in force. More unexpectedly, they declined by another 1.1% over the five months after it expired.
Fruit and vegetables explain part of the post-regulation fall, so the NBS also examined food excluding these volatile categories. Those prices fell 4.3% while the regulation was active and subsequently increased only 1.0% through July. They therefore remained below their pre-regulation level even after retailers regained more freedom to set margins.
The category data are striking. From August 2025 to July 2026, pasta and cereals were down 10.3%, sugar and chocolate 9.0%, fresh meat 8.6%, and other food products 9.1%. Fruit prices declined 20.1% and vegetables 16.1%. Non-food products covered by the regulation remained 2.4% cheaper. Bread and flour were among the exceptions, rising about 3.0%, while soft drinks were up around 0.5%.
These are not marginal changes. They have altered Serbia’s inflation profile. After the regulation ended in March, the year-on-year decline in prices of industrially processed food products more than doubled, from 1.2% to 2.7% by July, increasing their negative contribution to headline inflation from 0.3 to 0.7 percentage points.
The development helps explain why July headline inflation fell to only 1.9%, well below the NBS’s earlier forecast. Food prices have become one of the strongest disinflationary forces in the economy at exactly the moment when energy and service prices remain under pressure.
The more lasting policy question concerns what replaces temporary margin regulation. Serbia has moved towards a new legal framework aimed at limiting unfair commercial practices rather than directly prescribing margins.
A new Law on Trading Practices for Certain Types of Products, aligned with EU rules, entered into force alongside changes to trade and consumer-protection legislation. The Competition Commission is responsible for implementation and has identified 14 trading practices on a statutory blacklist. The framework is designed to limit abuse of bargaining power by large retail chains, particularly in relationships with agricultural and food producers.
Other amendments increase price transparency. Retailers face obligations relating to the real-time publication of price lists, while rules around promotions and the definition of a “previous price” have been tightened. The NBS argues that the combined measures should strengthen competition, transparency and consumer protection, indirectly supporting domestic price stability.
This shift from direct control to market-conduct regulation is economically more important than the end of the original cap. A price ceiling or margin ceiling can suppress inflation immediately, but it risks distorting supplier relationships, availability and investment incentives if retained for too long. Competition rules aim at a different problem: the distribution of bargaining power within the food supply chain.
The NBS has previously identified an uneven market position between food producers and retailers. The new legislation attempts to address that imbalance without permanently fixing final prices.
There is still a substantial base-effect issue ahead. Because the September 2025 margin restrictions lowered the comparison base, annual inflation is expected to rise sharply from September 2026 even without a corresponding monthly price shock. The central bank projects headline inflation slightly above 4%, partly for exactly that reason.
That means consumers may see a higher annual inflation rate even while many individual regulated-product prices remain relatively stable. The distinction between base effects and new price increases will become critical to public interpretation of the data.
For retailers, the evidence also points to a more competitive environment than simple margin restoration would imply. The NBS data show that the removal of restrictions did not lead to a uniform return to August 2025 price levels. That may reflect competition, supplier price changes, weaker input costs in some categories, regulatory scrutiny or a combination of these factors. The Inflation Report does not quantify how much each channel contributed, so the precise attribution remains open.
For food producers, the new trading-practices law may be even more consequential. Restricting retailer bargaining abuses could redistribute part of the value chain without necessarily increasing consumer prices, depending on competitive intensity and supplier costs. The effectiveness of that framework will therefore be tested not simply by CPI but also by payment terms, listing fees, promotional practices and supplier margins.
Serbia’s retail intervention has thus entered a second phase. The first was a visible administrative cap that delivered an immediate reduction in prices. The second is quieter and potentially more durable: rules designed to influence the behaviour of retailers rather than prescribe the final price.
The first phase ended without the inflationary snap-back many had expected. The durability of that outcome will depend on whether competition and the new trading-practices regime can preserve pricing discipline once the unusually favourable agricultural effects of 2026 begin to fade.
