Inflation expectations in Serbia’s financial sector dropped in December, aligning with the central bank’s target range, according to data released by the National Bank of Serbia (NBS) on January 17.

The one-year ahead inflation expectations of the financial sector fell to 3.75% in December from 3.9% in November, remaining within the NBS’s target band of 3% plus or minus 1.5%. The latest figures were drawn from a Ninamedia survey, the central bank said.

Short-term expectations among representatives of the economy rose to 5.0% in December, up from 4.6% in November, reflecting increased volatility in the near term. “These short-term fluctuations highlight lingering uncertainty, even as the broader outlook stabilises,” an NBS statement noted.

Meanwhile, a Bloomberg survey conducted in January found that financial sector inflation expectations for the year ahead remained steady at 3.5% for the third consecutive month.

Expectations for longer-term inflation also shifted. Business leaders anticipate inflation of 4.9% two years ahead and 4.0% three years ahead, representing a decline from November’s forecast of 5.0% for both periods. However, inflation expectations among the general population remain high. Citizens foresee inflation reaching 15% over the next 12 months, with two- and three-year expectations climbing to 12% in December, up from 10% in November.

Serbia’s annual inflation rate stood at 4.3% in December, unchanged from November, according to the Republic Statistical Office. On an annual basis, consumer prices in 2024 were 4.6% higher than in 2023, driven by persistent core inflation pressures, which remained above 5%.

Economic growth provided some counterbalance to inflationary pressures. Serbia’s economy expanded by an estimated 3.9% in 2024, lifting GDP to 18% above pre-pandemic levels, according to central bank data.