Consumer prices rise in year-end holidays

TIRANA, Jan. 10 – Consumer prices in December 2010 registered a 2.2 percent increase compared to the last November mainly because of higher food and beverage prices but also liquid gas. Latest data published by the country’s Institute of Statistics (INSTAT) show the Consumer Price Index in December rose 2.2 percent compared to November 2010 and 3.4 percent year-on-year, remaining within the central bank’s 3ѱ percent target. The highest increase was reported in the “food and non-alcoholic beverage” group whose index rose 4.6 percent compared to last November, reflecting the now frequent phenomenon of price increases at year-end holidays. The biggest increase within this group was reported in the “vegetables including potatoes” subgroup whose prices increased by 27 percent compared with the previous month.
Fruit and ‘oil and fat’ prices also grew 3.8 percent and 2.7 percent respectively.
Cigarette prices in December rose by 2.9 percent ahead of the warned new increased excise tax, at 70 lek per packet, in force since January 1 this year. INSTAT data show tobacco prices rose 8.5 percent year-on-year in December 2010, up from 5.8 percent y-o-y in December 2009.
Liquid gas, which is used as a cheaper alternative to cooking and heating, continued increasing even in December with prices up by another 9.8 percent compared to last November.
The transport index also registered a 1.3 increase after diesel and petrol prices went up 4.2 percent and 4 percent respectively.
The inflation rate was problematic only in the first three months of 2010 when it exceeded the central bank’s target by up to 0.7 percent with February CPI hitting a record 4.7 percent year-on-year before dropping to 4.1 percent in March 2010 and continuing its declining trend until the end of the 2010. Last November, Albania’s CPI registered its lowest year-on-year rate at 2.8 percent.
Albania’s price level index (PLI) for food and non-alcoholic beverages is at 72 percent of the EU 27, considerably more expensive compared to neighbouring Macedonia and even some EU members such as Poland, Romania, Bulgaria, according to a Eurostat survey in 2009.
According to the International Monetary Fund, the baseline inflation outlook for Albania remains favourable. Administrative price increases may drive headline inflation temporarily above the 3ѱ percent target band in the near term. However, underlying inflation is expected to remain under control, and annual inflation is projected at 3.5 percent in 2010 and 3 percent in the medium term, benefiting from the well entrenched credibility of the monetary policy framework.