Retail demand remains positive, helped by tourism and services, but inflation is now rising faster than average wages.
Montenegro’s consumer economy looks resilient on the surface. Retail volumes are still growing, tourism should improve over the summer and the labour market has benefited from years of wage reform. But the second half of 2026 will test whether households can keep spending as real wage momentum weakens.
Retail trade turnover rose 7.5 per cent in current prices and 4.8 per cent in constant prices in the first quarter compared with a year earlier. Food retail, motor fuel, cosmetics and pharmaceuticals, and other non-food categories all recorded annual growth.
That is a constructive signal. It shows that consumption has not rolled over, even after several years of inflation and rapid price increases in services and property. The EBRD also noted that retail trade benefited from rising real incomes in early 2026.
But the wage-inflation balance is becoming less favourable. In April, Montenegro’s average gross wage was €1,229, while the average net wage was €1,029. The average net wage rose only 0.2 per cent from March and 2.0 per cent year on year. With April consumer prices up 1.4 per cent month on month, real net wages fell 1.2 per cent compared with the previous month.
Inflation accelerated further in May. Consumer prices rose 0.4 per cent month on month and 3.6 per cent year on year. The strongest monthly increases came from restaurants and accommodation, clothing, food, recreation, transport and alcohol and tobacco.
This creates a consumer forecast with two halves. The summer season should support retailers, restaurants, petrol stations, supermarkets and coastal services. Foreign tourists will add demand in the peak months, while new air capacity into Podgorica should help broaden the visitor base. But outside the peak season, domestic purchasing power will matter more, and there the picture is less comfortable.
The strongest consumer sectors in H2 should be grocery, value retail, petrol stations, pharmacies, tourism-linked retail and well-located food service. The most exposed are discretionary non-food retailers, mid-market restaurants and businesses relying on domestic customers without strong differentiation.
For hospitality, the problem is especially clear. Restaurants and accommodation prices are rising, but so are labour, food, rent, energy and financing costs. Operators may grow revenue in the summer and still face weaker margins if price increases cannot keep pace with costs.
Montenegro’s real retail growth should remain positive but slow toward low single digits in H2 2026. Tourism will flatter the summer data, but domestic demand will become more selective in autumn.
The consumer has not disappeared. But the market is shifting from broad post-wage-reform spending to a more price-sensitive phase.
