This paper examines the relationship between changes in household income and consumer choices in Serbia, with particular attention to the period 2021–2025. Using official Household Budget Survey evidence from the Statistical Office of the Republic of Serbia (SORS), the study documents changes in nominal household income, individual consumption expenditure, the composition of household budgets, and differences between urban and other settlements. Average monthly household income in money and in kind increased from RSD 71,733 in 2021 to RSD 109,136 in 2025, while average individual consumption expenditure increased from RSD 71,902 to RSD 109,787. Despite substantial nominal growth, household budgets remained heavily concentrated in necessities: food and non-alcoholic beverages accounted for 36.6% of consumption expenditure in both 2024 and 2025, while housing, water, electricity, gas and other fuels accounted for 16.1% in 2025. The findings are consistent with the proposition that income changes affect consumer choice not only through the quantity of goods purchased but also through the allocation of household resources across essential and discretionary categories. However, nominal income growth should not be interpreted as an equivalent increase in real purchasing power because consumer prices also changed during the period. The paper therefore emphasizes the importance of distinguishing nominal income growth from real welfare improvements and of considering household heterogeneity, settlement type, demographic structure, and the relative price of necessities when interpreting changes in consumption.
Keywords:Serbia; household income; consumer choice; household consumption; purchasing power; expenditure patterns