Serbia's July Inflation Estimate Falls to 1.9%

Serbia’s year on year inflation for July stands at 1.9 percent according to the flash estimate, 0.8 percentage points below the 2.7 percent officially measured for June by the Statistical Office of the Republic of Serbia (RZS). Serbian President Aleksandar Vucic announced the figure on August 3, first in Novo Selo near Kupres in Republika Srpska, then that evening in an interview with TV Prva from the family home in Cipuljic, in the municipality of Bugojno.

The flash estimate is a preliminary calculation that precedes the official statistical release, due for July in mid August. The June figure, for instance, was published by the RZS on July 13. Until that release, 1.9 percent remains an estimate, not a final number.

How 1.9% Compares to the NBS Target

The National Bank of Serbia (NBS) targets 3 percent inflation with a tolerance band of 1.5 percentage points, meaning a range of 1.5 to 4.5 percent. The July estimate falls in the lower half of that range, following three months in which measured inflation kept declining: 3.5 percent in May, 2.7 percent in June, and an estimated 1.9 percent in July.

For the central bank, the gap between 3.5 and 1.9 percent is not cosmetic. May’s figure sat close to the middle of the target and was pulled upward by domestic fuel prices, which the government partly offset by cutting excise duties and drawing on its own reserves. The July estimate, by contrast, rests on cheaper food.

Why July Is Lower Than June

The answer lies mainly in the field and the greenhouse. At its session on July 9, the NBS Executive Board noted that food prices have been falling year on year since November 2025, that the decline stood at 1.5 percent in May, and that even three months after the regulation capping trade margins expired, there have been no significant price increases for the products it covered.

“Given the good agricultural season so far and this year’s fruit and vegetable yield, unprocessed food prices could have a positive, disinflationary effect,” the NBS said in a statement issued after the session.

June’s statistics confirm that on the food side and contradict it on services. Food and non-alcoholic beverages were 0.6 percent cheaper in June than in May, while prices in the recreation, sport and culture category rose 5.0 percent in a single month. The gap is sharper year on year: fruit and nuts were 9.3 percent cheaper, while water supply cost 20.5 percent more, newspapers and magazines 22.8 percent more, package holidays 24.4 percent more, and photography services 24.7 percent more.

The sum of these movements produces a low average rate, but for a household that does not buy package holidays and pays its water bill every month, the average does not look the same as it does in a table. Total monthly price growth in June came to 0.2 percent, and prices are up 2.6 percent since December 2025.

What the Data Means for the August 13 Session

The NBS key policy rate is 5.75 percent and has held at that level since September 2024. The deposit facility rate is 4.5 percent and the lending facility rate is 7 percent. The Executive Board’s session is scheduled for August 13, ten days after the flash estimate was released, and will be the first at which the rate is weighed against single digit inflation sitting in the lower half of the target.

Two arguments pull in opposite directions. A low July reading pushes the real interest rate higher than it was in May, a classic trigger for loosening monetary policy. On the other hand, the NBS’s own projection expects inflation to temporarily breach the upper bound of the target near the end of this year or the start of next, and from September the comparison will be skewed by the low base from September 2025, when wholesale and retail trade margins were capped at 20 percent. A central bank counting on inflation drifting back toward the upper bound is unlikely to cut the rate on the strength of one summer reading.

How the Figure Was Announced

Vucic presented the flash estimate in a political setting, on a day when he was on a three day visit to Republika Srpska and Serb-majority municipalities in the Federation of Bosnia and Herzegovina.

“The citizens of Serbia succeeded, I did not. The citizens succeeded, we do our job, that is our duty. Inflation has been beaten, but it is a vicious disease, it is like cancer, it is like a tumor. You always have to stay on top of it. So yes, we succeeded, but we have to keep working, to be careful, responsible, and to keep fighting,” Serbian President Aleksandar Vucic said in an interview with TV Prva.

Earlier the same day, in Novo Selo, he put it more briefly: “So we managed to beat it, finally, and now we just need to think about how to push forward.” Alongside the inflation figure, he also said Serbia remains the fastest growing economy in Europe in 2026 and that the IMF projects it will hold that spot next year too.

The next two dates on the calendar are concrete: the RZS’s official release of July inflation in mid August, and the NBS Executive Board’s decision on August 13. Only after the first will it be clear how far off the flash estimate was, and only after the second will it be clear whether the central bank is ready to reward falling inflation with cheaper money.