Authors: Miloš Stevanović and Slaviša Lakić
Date: August 19, 2025

Price Movements of Basic Foodstuffs

Shopping cart with everyday groceries in the store: Basic foodstuffs in BiH have experienced changing price trends over the past 12 months.

The prices of basic foodstuffs in Bosnia and Herzegovina continued to rise over the last year, although some products also recorded price decreases. According to the data of the Agency for Statistics of BiH, between mid-2024 and mid-2025, items such as meat, dairy products, and coffee increased in price the most, while certain cereals and oils recorded price drops. For example, wheat flour decreased in price over the past year (from ~1.60 BAM to ~1.40 BAM per kilogram), but paradoxically bread became more expensive (from ~3.40 BAM to ~3.60 BAM per kilogram). Similarly, edible oil and sugar recorded price drops during the same period, while milk, cheese, meat, and coffee became more expensive.

The table shows the average prices of selected foodstuffs in May 2024 and May 2025, with the corresponding rate of change:

Source: Agency for Statistics of BiH

As can be seen, basic foodstuffs and beverages continued to become more expensive. A kilogram of wheat bread reached an average of 3.80 BAM, a kilogram of rice 4.60 BAM, and a liter of milk in a carton about 2.30 BAM. A kilogram of boneless beef rose from an average of ~20 BAM to over 24 BAM, while pork with bones exceeded 11.5 BAM/kg. Fresh chicken remained around 6.5–7 BAM/kg. Price increases are also visible with dairy products – hard yellow cheese rose to over 17 BAM/kg, and butter even to 34 BAM/kg. For citizens’ daily habits, particularly significant is the increase in the price of ground coffee (almost 60% more expensive than a year earlier), as well as milk chocolate (over 50% more expensive). On the other hand, some basic foodstuffs show stagnation or price decreases: e.g. in May 2025, oil was sold at about 3.30 BAM/l, which is similar to or lower than a year earlier when it was about 3.50 BAM, and a similar trend of price stabilization was noticed with sugar (about 2.10–2.30 BAM/kg). Such divergent trends mean that the consumer basket is changing – citizens spend significantly more money on some products than last year, while for a few items there is noticeable relief.

Overall Inflation and Food Price Increases

General inflation in BiH over the past 12 months has noticeably slowed compared to record levels from 2022 and early 2023, but food price increases are still above average and burden household budgets the most. At the level of the entire economy, annual inflation in mid-2025 amounted to about 3.7% (data for May compared to May of the previous year). At the same time, food and non-alcoholic beverages increased by almost 9.9% year-on-year, which means that most of the inflationary pressure came from the food sector. For illustration, in April 2025 food was even 8.9% more expensive than a year earlier, while overall inflation was 3.4%. In other words, without food price increases, inflation in BiH would be significantly lower – food products have the largest weight in household consumer baskets, and their price hikes are directly felt in citizens’ living standards.

It is important to note that inflation in 2023 was on a downward path (after double-digit rates in 2022), but at the end of 2024 it recorded a slight increase again, primarily due to food price increases. According to an IMF report, inflation in BiH at the end of 2024 reached about 3.7%, “mainly due to food price increases.” This is confirmed by trade union analyses of the consumer basket: the share of food costs in the total trade union basket for a four-member family in BiH amounts to about 45%, by far the highest among all cost categories. Therefore, rising food prices disproportionately affect living standards – the union estimates that the average salary (about 1,565 BAM in FBiH, March 2025) covers only about 49% of the costs of the average consumer basket, while the minimum wage (1,000 BAM) covers only 31% of basic living costs.

Although energy and industrial products in one period recorded a calming or decline in prices (e.g. fuel and clothing became cheaper on average during 2024), the continuous rise in food prices kept inflation “alive.” Even on a monthly basis, the trend of rising food prices continued in 2025 – in May 2025 food was an additional 0.9% more expensive than the month before, which means that price increases did not subside even after the first inflationary shock had passed. Consumers in BiH feel this best during every grocery purchase: the basic basket consisting of bread, milk, meat, eggs, oil, flour, sugar, and similar items is noticeably more expensive today than a year ago.

Main Causes of Food Price Increases

Food price increases in BiH over the past one to two years are the result of a combination of global and domestic factors. Global factors played a key role in 2022 and 2023: above all, disruptions on world markets caused by the pandemic and the war in Ukraine led to a strong increase in energy and raw material prices, which spilled over into food prices. The war in Ukraine particularly affected the grain and oilseed markets – as major producers, Russia and Ukraine reduced exports, so wheat on the world market became more expensive, which in turn raised the prices of flour and bakery products everywhere, including BiH. At the same time, oil and gas prices jumped to record levels during 2022, increasing the costs of transportation and food production. The Central Bank of BiH points out that this global supply shock caught BiH with certain structural vulnerabilities – for example, BiH is highly import-dependent on food and energy – which further amplified the inflationary blow. In other words, BiH imports most of its basic inputs (fuel, mineral fertilizers, animal feed, even some finished food products), so every global price increase inevitably means higher prices on domestic shelves.

In addition to geopolitical and market factors, climate factors also influenced food prices. During the summer of 2023, BiH and the region were hit by a pronounced drought in certain periods, which reduced the yield of some crops. Consumer association representatives warned already in autumn 2024 that the “summer drought announced an increase in the prices of flour and bakery products, as well as sugar,” due to the weaker harvest of wheat and sugar beet. Similarly, unfavorable weather conditions (floods or droughts) can affect the domestic supply of vegetables and fruits, pushing prices upward. Price increases of animal feed due to poor corn and other cereal harvests often spill over into the prices of meat and dairy products, as farmers face higher production costs.

Energy costs and fuel prices were directly reflected in the food supply chain. When the price of diesel fuel in 2022 jumped above 3 BAM/l, many producers and retailers in BiH soon increased their product prices, justifying it with higher transport costs. However, in 2023 fuel prices dropped significantly – diesel in the second half of 2024 fell to about 2.30–2.40 BAM/l (compared to ~2.90 BAM a year earlier) – but this drop was hardly reflected in lower food prices. This indicates that earlier food price hikes were partly provoked by high oil prices, but that when fuel prices fell, retailers did not proportionally reduce food prices. Entrepreneurs in 2022 and early 2023 “often justified price increases with rising fuel prices,” while now, when fuel has become cheaper, “no one even jokes that food prices will decrease.” This “seesaw effect” also suggests elements of margins and profits – some retailers retained higher retail margins instead of lowering product prices when their input costs dropped, leaving consumers deprived of the benefits of lower raw material prices.

Disruptions in supply chains that marked the post-pandemic period should also not be ignored. Global logistics in 2021–2022 was slowed down (expensive container transport, shortages of raw materials, production interruptions), which led to occasional shortages or higher import costs of certain food goods. BiH felt, for example, the shortage and price increase of edible oil in the first half of 2022, when the supply of sunflower oil on the market was endangered due to the war. It was similar with sugar – panic on the regional market and export restrictions from certain countries led to the retail price of sugar in BiH rising above 2 BAM/kg. Although global supply chains partially stabilized by 2023, the effects of these disruptions continued to be reflected for some time through higher shelf prices.

In addition to supply-side factors, domestic demand and rising incomes also contributed to persistent food inflation. In BiH, during 2023 and 2024, there was strong nominal wage growth – the average salary grew between 10% and 15% annually, and the minimum wage was increased to 1,000 BAM. This income growth, although welcome for living standards, also meant more disposable money that “pushed” domestic consumption and gave sellers room to keep higher prices. A Bloomberg Adria analysis states that “strong domestic demand and rising wages” keep inflation at a higher level, and that “rising food and service prices are the main generators of inflation” in BiH. The increase of the minimum wage in particular caused a chain effect – labor input costs in food production and retail sectors increased, which was partly built into the final consumer prices.

Finally, one of the reasons why food prices in BiH fall more slowly than they rise is market structure: the retail food market in BiH is concentrated in a few large chains, alongside many smaller retailers, but without real price competition as in some larger EU economies. In such circumstances, retailers are reluctant to lower prices unless forced by market surpluses or state measures. Data shows that wholesale food prices in BiH largely fell during 2023 compared to 2022, following the global trend (the FAO food price index globally was ~10% lower at the beginning of 2024 than a year earlier). However, retail prices did not follow that drop – “while some products at wholesale fell significantly, their prices in stores mostly rose.” This phenomenon suggests that in the chain from producer to end buyer, part of the benefit of cheaper raw materials was “lost” with intermediaries or retained as extra profit for the retail sector.

All of the above indicates that food price increases are a complex problem caused primarily by external shocks (prices on the global market, import dependency) amplified by local weaknesses (low agricultural productivity, oligopolistic market structure, rising labor costs). This is confirmed by the Governor of the Central Bank of BiH, Senad Softić, who stated at the height of the inflationary crisis that the “global supply shock coincided with our structural weaknesses” and that lasting solutions to price increases require long-term economic reforms that will increase the resilience of the domestic economy. In the meantime, short-term, the question arises: what can be done to mitigate the rise in food prices and protect citizens?

The Role of Foreign Exchange Reserves of the Central Bank of Bosnia and Herzegovina

From time to time, the question has been raised in the public as to whether something can be done through monetary policy or by using the foreign exchange reserves of the Central Bank of Bosnia and Herzegovina (CBBiH) to stop inflation and rising prices, especially for food.

The Central Bank of BiH operates under the currency board arrangement, which means the convertible mark (BAM) is pegged at a fixed exchange rate to the euro and every issued BAM is 100% backed by foreign exchange reserves (euros in the CBBiH balance sheet). BiH's foreign exchange reserves have reached a historic high – at the end of May 2025, they stood at around BAM 16.93 billion, and by the end of the year, they exceeded BAM 17 billion.

However, the purpose of these reserves is not to finance interventions in the domestic market or to subsidize imports, but to maintain monetary stability. Experts and officials emphasize that any use of these reserves for other purposes would undermine the currency board regime and the trust in BAM. The Central Bank firmly states:
"We do not support initiatives aimed at utilizing any of the Central Bank's reserves, as this undermines the monetary stability of the country and the Law on the CBBiH. Those familiar with the situation know that there are no 'surplus' reserves in the CBBiH – every reserve has its purpose."

In other words, foreign exchange reserves are not a “state fund” from which food prices can be subsidized or imports covered at a more favorable exchange rate – their sole purpose is to guarantee the value of the BAM and the stability of the financial system. Therefore, the Central Bank does not have conventional monetary policy tools like central banks with floating exchange rates (e.g., it cannot raise interest rates to curb inflation, nor can it “print money” to finance anti-inflationary measures). Its primary role is to maintain the fixed exchange rate and currency stability, which in the current inflationary circumstances acts as an anchor of stability. Without the currency board, the BAM could have devalued under pressure, further increasing the price of imported food.

Governor Softić emphasized that the CBBiH is doing what falls within its mandate:
“It ensures monetary stability and the stability of the domestic currency, which is particularly important in situations like this. Imagine if the exchange rate of the BAM changed daily, further contributing to uncertainty and changes in purchasing power.”

The currency board has prevented even worse price hikes – and international financial institutions (such as the IMF) strongly support the preservation of this system and the “stability of the convertible mark,” naming it one of the pillars of BiH’s macroeconomic stability.

Therefore, the foreign exchange reserves of the Central Bank of BiH should not be used to directly control prices or to finance measures aimed at reducing price increases. Their use is only conceivable in exceptional circumstances – for example, if the stability of the BAM’s exchange rate were threatened or in the case of a major financial crisis – but even then, they would not have a direct effect on food prices except through preserving the currency’s value. Any attempt to “dip into” the reserves to subsidize food imports or influence prices would undermine trust in the monetary system, potentially trigger capital outflows, and cause other negative consequences.

In short, monetary solutions for expensive groceries are not feasible under the current system, so the focus shifts to fiscal and structural measures that authorities can implement.

Possible Measures to Reduce Food Prices

Since food price hikes have been largely driven by external factors and have proven to be “sticky” (prices have not decreased even when pressures subsided), governments and institutions can consider several measures to alleviate the burden on citizens.

Fiscal measures are among the most direct – including reducing taxes or levies on basic foodstuffs. In BiH, there has long been debate over introducing a differentiated VAT rate – the current uniform rate is 17% for all products. A proposal was made to introduce a lower VAT rate (e.g., 5%) on essential food items to reduce their price by the amount of the tax relief. This proposal was adopted by the House of Representatives of the BiH Parliament back in 2022, along with a decision on the temporary abolition of fuel excise duties, but the House of Peoples did not confirm it, so the measure was never implemented. That was a missed opportunity to at least partially cushion the price increase – estimates suggested that basic food items could have become about 7–10% cheaper at retail level with a lower VAT.

There is still a possibility that this issue could be revisited. However, fiscal experts warn that lowering VAT would reduce budget revenues (as the state collects a significant portion of VAT from the food trade sector), so a balance is needed between helping consumers and protecting budget income. Some neighboring countries have already done this – for example, Croatia reduced VAT on most food to 5% in April 2022, while Serbia and Slovenia maintained differentiated VAT rates for basic items.

There is a consensus in BiH that lowering VAT on food would be the fastest and most effective fiscal measure to help citizens.

Another key fiscal measure is excise tax policy on fuel. Fuel affects food transport and production costs, so cheaper fuel would logically help reduce food costs. During 2022–2023, several proposals were made to abolish or suspend excise duties on petroleum products (which are about BAM 0.30 per liter), which would reduce diesel and petrol prices accordingly. This proposal, too, was adopted in one house of the state parliament but failed to pass in the other and was never implemented.

Had it been implemented, citizens would have experienced cheaper fuel at the pumps, and possibly a halt in the rising costs of transport and distribution. Since global oil prices have since stabilized, this proposal has taken a backseat, but remains an option in case of a sharp fuel price increase.

Even Governor Softić suggested such a measure as part of an anti-crisis package – including a moratorium on excise duties or even temporary reduction, as this would directly lower transport costs and ease inflationary pressure.

Other Fiscal Tools and Market Interventions

Besides taxation, subsidies and margin controls are potential tools.

Subsidizing the most vulnerable groups is a measure that does not directly reduce store prices, but provides financial assistance to help people afford more expensive goods. This may take the form of one-time cash payments, food vouchers, or increases in social benefits and pensions. Such measures were partially implemented in BiH – pensions and social transfers were increased in both entities (FBiH and RS) during 2022–2023 due to inflation. Entity governments also issued occasional one-time payments (e.g., to pensioners, veterans, public sector employees).

However, these measures are limited in scope and often exclude private-sector workers or the middle class, prompting consideration of targeted product subsidies.

Production subsidies are also important: supporting domestic food production can increase supply and reduce import dependence in the medium term. Both entities increased agricultural budgets in 2023, providing more support to farmers (especially for fuel subsidies for spring sowing, fertilizer, milk premiums, pig farming incentives, etc.). The goal was to maintain or increase domestic production despite more expensive inputs, keeping the market supplied and avoiding shortages that drive prices up.

For instance, in mid-2022, the FBiH Government exempted farmers from paying road tolls on diesel (BAM 0.15/L) through the so-called “blue diesel” program, while entity governments issued various “extraordinary” payments to registered farms. These moves likely helped to prevent even sharper food price increases, although they didn’t result in outright price reductions.

Experts stress that authorities should strategically invest in increasing domestic food production capacity (e.g., irrigation systems, subsidies for livestock farms, protection of milk purchase prices, etc.) so that BiH becomes less dependent on imports and global market fluctuations. These are long-term measures, whose effects aren't immediate but are essential for future price stability.

Price and Margin Controls

Price and margin controls are more direct but controversial instruments. Some countries have resorted to freezing prices of certain basic products for a time (e.g., Hungary froze sugar, oil, and flour prices; Serbia also froze prices of several staples). In BiH, there were no such decisions at the national level (and achieving political consensus would be difficult), but entity and cantonal authorities tried various approaches.

The RS Government launched the “0% margin” campaign in March 2025, in cooperation with retail chains, where producers, distributors, and retailers voluntarily gave up any profit on about 30 selected products – mostly food – offering them at reduced prices to citizens. According to the RS Minister of Trade and Tourism, those products were on average 20–30% cheaper during the campaign.

Simultaneously, RS ran the “Socially Responsible” campaign, with about 500 different products sold at discounted prices for a certain period. However, the results were limited. Consumer associations reported that many items on the 0% margin list were not actually essential to average households (e.g., ketchup, tomato juice, jam), while basics like flour, oil, and eggs were missing or less present.

Also, shoppers often noticed that products included in the campaign had the same prices as comparable ones not included – for example, a sugar brand in the campaign cost the same as another brand not part of it.

Despite these efforts, official statistics showed that food prices in RS were still 6.4% higher in April 2025 compared to a year earlier.

In FBiH, somewhat different approaches were employed — in late 2022 and early 2023, government-supported voluntary retail campaigns were organized, where certain essential food items were sold with minimal margin or at so-called “fixed prices” for a limited period. For instance, a major retail chain in FBiH offered “frozen” prices for about 20 basic items (oil, flour, sugar, salt, certain types of meat) for one month at the beginning of 2023.

In February 2024, stores in FBiH marked some products with special labels like “0% margin” or “fixed price”—for example, a kilogram of sugar cost BAM 2.10 as a fixed price, slightly below the usual rate. However, these prices were guaranteed only temporarily (in the case of sugar, the program ended by the end of March 2024). These measures had a short-term effect—temporarily softening the impact for consumers of some items, but didn’t solve the underlying problem. Once the campaigns ended, market prices largely returned to previous levels, and some products continued rising in price due to new input costs.

Removing or Reducing Customs Duties and Import Levies

Another measure to consider is the removal or reduction of customs duties and other import levies on certain goods. BiH already has a relatively liberal trade regime for most food products (due to the Stabilization and Association Agreement with the EU, customs duties on food imports from the EU are largely abolished or minimized). However, for product categories like meat, dairy, and certain seasonal fruits/vegetables, protective duties or quotas remain to safeguard domestic production.

When prices for these goods surged, consumer protection associations called for the temporary suspension of customs duties — for example, on meat, eggs, or milk — to enable cheaper imports and increased competition to lower prices. On the other hand, domestic producers opposed this, warning that being flooded with cheaper imports from the EU or the region would destroy their livelihoods.

Governments thus had to balance consumer and producer interests.

A rational step would be the removal of customs duties on imported animal feed, fertilizer, seeds, and agricultural inputs — directly reducing food production costs in BiH and helping domestic producers offer cheaper products. Such measures have already been partially taken (e.g., customs duties on imported mineral fertilizers were reduced to 0% in 2022/2023 due to the global fertilizer crisis).

Authorities can also implement administrative market control measures: strengthen inspection oversight to prevent price collusion or cartel behavior among large retailers, publish “black lists” of those unjustifiably hiking margins, and promote competition (e.g., by enabling new retail chains to enter, supporting consumer cooperatives, etc.). In some EU countries (like France), governments negotiated with retailers to limit margins on essential goods during inflationary periods — something similar could be attempted in BiH on a voluntary basis, as RS has already done.

Summary: Combining Measures to Tackle High Food Prices

In summary:

• There is a range of tools that could help to control or at least alleviate food price increases: from tax relief (lower VAT, excise duty suspension) to social assistance (subsidies, transfers) to direct interventions (price/margin controls, enhanced imports).

• Each tool comes with its pros and cons — some strain the budget, others risk market disruption — so experts recommend a combined approach.

• The Governor of CBBiH has suggested measures like temporary subsidies for the vulnerable, a moratorium on excise duties, and even a moratorium on certain taxes as part of an anti-inflation package.

• The IMF, in its recommendations, emphasizes that social transfers be more precisely targeted to those most affected by inflation.

• Timing and proportionality are critical — overly strict measures (like long-term price freezes) can result in shortages, while overly mild actions may be ineffective.

Comparison with Neighboring Countries and European Trends

The trend of rising food prices affected all neighboring countries and Europe, too — some harder than BiH, others managing to curb food inflation earlier.

• Croatia, a member of the EU and eurozone since 2023, experienced food inflation exceeding 15% year-on-year at the end of 2022 and early 2023, before it began slowing by late 2023. Even by April 2024, some items saw massive price increases (e.g., olive oil +61%, certain meats +20%+, milk and cheese in double digits). Croatia responded with VAT reductions on food and euro adoption, which provided monetary stability — although the euro conversion also triggered rounding-related price hikes. The government also publicly challenged retailers over unjustified price hikes, prompting some to lower prices preemptively.

• Serbia endured prolonged double-digit inflation from 2021 to mid-2023 (with food inflation over 20% at times). It responded with administrative export bans (on wheat, corn, flour, oil) to secure domestic supply, and direct price controls (e.g., the most common loaf of bread was frozen at 54 dinars, a liter of milk at 128 dinars). While these measures kept prices accessible, they also caused shortages. In 2023, Serbia gradually lifted price freezes and shifted to margin controls, capping retailer margins at 5–10% for basic products. Food inflation dropped to around 5–6% by early 2024, though prices remained significantly above pre-crisis levels.

• Montenegro, North Macedonia, Albania, and other Western Balkan economies also faced food price surges, but generally managed to bring food inflation down faster during 2023. For example, in February 2024, North Macedonia had only 1.5% higher food prices year-on-year thanks to a good harvest and subsidies; Montenegro posted around 1.3% food price growth in January 2024. These economies are smaller and rely more on imports, so global price decreases were quickly felt domestically.

• Within the EU, countries responded in various ways:

  • Spain, for instance, eliminated VAT on bread, flour, milk, cheese, fruits, vegetables (from 4% to 0%) and lowered VAT on oil and pasta (from 10% to 5%) at the end of 2022 — directly lowering prices early in 2023. The government also encouraged retailers to offer “basic food baskets” at affordable prices.

  • France negotiated “anti-inflation quarters” with retailers — periods where they commit to holding prices on around 100 key products.

  • Germany and other wealthier nations emphasized general relief packages (e.g. one-time payments, child allowances, wage increases) rather than direct market interventions.

By late 2024 and early 2025, food inflation in the eurozone had significantly decelerated — prices in June 2025 were about 9% above the previous year, compared to over 14% just six months earlier.

Thus, BiH roughly lags this trend by a few months — food inflation is beginning to cool but remains high (~10% year-on-year in mid-2025). Thanks to the currency board, BiH effectively “imports” the ECB’s anti-inflation policy — as the euro strengthens and EU policy tightens, pressure eases for the BAM. But there's still the challenge of bridging the gap until retail prices fall accordingly.

Conclusions: A Pragmatic Path Forward

In conclusion:

• Experiences of neighbors and EU countries show there is no quick fix to soaring food prices.

• A well-calibrated package is needed — combining temporary relief measures (lower VAT, margin limits, social support) with longer-term strategies (agricultural investment, reserves, regional trade cooperation).

• The good news: global markets have partially stabilized — oil prices are under control and grain prices on world exchanges fell by about 13.7% in 2023/24 compared to 2022.

• The bad news: retail prices in BiH remain stubbornly high and adjust down slowly.

• In the coming period, attention will turn to whether food inflation in BiH finally subsides and whether government measures, if taken, succeed in alleviating this major blow to citizens.

• In the long run, the solution lies in sustainable domestic production, more efficient markets, and social policies designed to buffer future crises — so that, even in tough times, basic foodstuffs are not a luxury for anyone.

/ / /

"Standard Prva" LLC Bijeljina is a company registered in Bijeljina at the District Commercial Court in Bijeljina. Company’s activities are accountancy, repurchases of receivables, angel investing and other related services. Distressed debt is a part of the Group within which the company repurchases the receivables, which function and are not returned regularly.

Lawyer’s Office Stevanović is the leading lawyer’s office in the region with the seat in Bijeljina. The LO abbreviation represents Lawyer’s Office of Vesna Stevanović and Lawyer’s Office of Miloš Stevanović.

Contact for media press@advokati-stevanovic.com or via telephone 00 387 55 230 000 or 00387 55 22 4444.