Interannual inflation in Serbia is almost two percentage points higher than the National Bank of Serbia (NBS) had forecast, and GDP growth is now projected to be lower than previously expected.
NBS Governor Jorgovanka Tabaković cited a 36% year-on-year increase in fruit prices in July as a major factor. She said weather conditions, including sun during the winter, frost in the spring, and drought at the start of summer, reduced fruit yields and drove prices higher. Strawberries and cherries recorded the largest increases within the fruit category.
Tabaković later noted that higher inflation was also the result of price increases across all food categories and energy costs. Household electricity prices rose around 8% in November 2024, while gas prices increased 10%. For companies, electricity prices in the first half of 2025 were about 12% higher, contributing to increased food prices and inflation.
She also referred to reduced investment and consumer confidence, partly linked to domestic blockades, as factors affecting growth. The NBS now projects GDP growth of 3.5% for 2025, down from the previous forecast of 2.75%. GDP growth in both Q1 and Q2 of this year was 2%.
Despite the revision, the NBS expects GDP growth between 4% and 5% over the next two years. "In the second half of the year, we still expect an acceleration of economic activity, which should be contributed by the continued growth of production and exports of the automotive industry, as well as the implementation of infrastructure projects planned by the Leap into the Future - Serbia Expo 2027 program," Tabaković said.
The NBS also forecasts inflation will gradually slow next year, averaging 4%, and will approach the target midpoint by the end of 2026. "Factors that will affect the expected slowdown of inflation during the projection horizon are still restrictive monetary conditions, a high base for food prices, primarily fruits and vegetables, lower import inflation, and the weakening of the dollar against the euro," she added.
Source: Vreme
