CB BiH: Inflation rises, annual economic activity growth slows

(Patria) - The Central Bank of Bosnia and Herzegovina (CBBiH) estimated the annual growth of real economic activity in the second quarter of 2025 at 1.9 percent, which is 0.6 percentage points lower compared to the previous round of rapid estimates.

GDP growth prospects have been revised downward compared to the previous round of rapid estimates as a result of lower-than-estimated activity levels in industrial production, stagnation in tourism activity, stronger inflationary pressure, and partly due to official data published for the first quarter of the current year.

Stagnation in activity in the service sector, especially tourism, in addition to low activity levels in the industrial sector, indicates that economic activity in the third quarter could remain relatively modest. The first preliminary estimate of real GDP growth in the third quarter is two percent.

The CBBiH estimates total inflation in the third quarter of 2025 at 4.3 percent, and core inflation at 4.6 percent. Total inflation has been significantly revised upward (1.3 percentage points) compared to the rapid estimates from June, due to a strong rise in food prices, a renewed increase in electricity prices for household consumers, and a stronger-than-expected effect of the minimum wage increase on wages in all sectors, and prices in most categories.

The rise in domestic prices is significantly contributed by factors from the domestic environment, such as the increase in service prices. In the current circumstances, the CBBiH expects inflation to gradually slow down in the short term.

Nevertheless, inflationary pressures will remain significant until the end of the year. The preliminary estimate of total inflation in the fourth quarter of 2025 is 3.9 percent, and core inflation is 4.6 percent.