Serbian Government Introduces Price and Interest Rate Caps

BELGRADE (Reuters) – Serbia’s government will impose a cap on profit margins for food and consumer goods, as well as on interest rates for cash loans, starting next week. Populist President Aleksandar Vucic made the announcement on Sunday.

These decrees are aimed at improving living standards and come after months of daily anti-corruption protests alongside inflation that reached 4.9% in July, surpassing the central bank’s target of 3%, with a tolerance of 1.5%.

Vucic stated that large retailers dealing in food, beverages, and other consumer goods will need to limit their profit margins to around 20%, reduced from about 40%, or face significant fines. “We are introducing these measures to increase purchasing power and living standards … and (contain) inflation,” he explained to reporters.

Additionally, the president indicated that commercial banks should reduce rates on cash loans for private borrowers to approximately 7.5%, which is three percentage points lower than the current average. The central bank maintained its benchmark rate at 5.75% this month.

The government is set to adopt the decree next week. Notably, such decrees are executive orders that do not require parliamentary approval.