BAKU, Azerbaijan, July 14. The Executive Board of the Serbian NBS voted in favour of keeping the key rate at 5.75 percent and left the deposit (4.5 percent) and lending (7 percent) rates unchanged.
Data obtained by Trend from the country's central bank shows that prices of some food commodities on global exchanges (cocoa and coffee), recently peaked, as well as the effects of last year's drought and reduced supply of fruits and vegetables have triggered an accelerated increase in domestic food prices in recent months compared to last year.
Year-on-year headline inflation slowed to 3.8 percent in May, and core inflation to 4.6 percent. However, as the prices of petroleum products rose on the back of elevated global oil prices in June and the anticipated effects of adverse weather on food prices, year-on-year inflation will most likely post a temporary pick-up in the coming months, trending around the upper bound of the target tolerance band.
According to SORS estimates, in the January–May 2025 period year-on-year growth in industrial production equalled 2.5 percent, driven primarily by intensified activity in manufacturing (4.2 percent), where the effects of increased investments in the car industry played out. Goods export also recorded a relatively high year-on-year growth on this account (10.2 percent in the five months), while goods import rose faster (11.5 percent in the five months) due to the ongoing investment cycle and the rising disposable income.
Looking at May alone, year-on-year growth in goods export considerably outshone goods imports (17.3 percent vs. 6.8 percent). Activity indicators in the services sector were also more favourable in May than in April and during Q1, which is primarily indicated by the stepped-up turnover in retail trade, 5.6 percent year-on-year in May, after 0.8 percent in the first four months of the year.
The Executive Board expects economic activity to pick up in the remainder of the year, notably thanks to the already evident production increase in the car industry, as well as the realisation of infrastructure projects envisaged within the Serbia Expo 2027 programme. Support to economic growth also comes from corporate and household lending growth of more than 11 percent year-on-year in May, attributable to the past monetary policy accommodation by the NBS and the ECB, and more favourable borrowing conditions.
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