Serbia’s inflation rate declined to 12.5% YoY in July, down from 13.7% in June. The slowdown in inflation surpassed economists’ expectations and brings into focus the central bank’s decision of the prior Thursday to maintain interest rates at their eight-year high of 6.5%. The central bank had accurately projected this 12.5% inflation rate and anticipates a further reduction to 8% by December. On a separate note, the European Commission has cautioned Serbia that potential political measures might be forthcoming if the nation does not undertake adequate efforts to resolve the ongoing conflict with Kosovo.