By ervin lisaku
TIRANA, March 7 – Consumer prices in Albania, a net food importer, continue remaining at their highest historical levels as global food prices soar shrinking the household budgets of thousands of poor families. Latest data by the country’s Institute of Statistics show the Consumer Price Index (CPI) rose 4.5 percent year-on-year in February 2011, exceeding the central bank’s target band by 0.5 percent. Compared to last January, the inflation rate was up 2.3 percent mainly because of the ongoing rise in food, vegetable, tobacco and medicine prices. In February 2010, the CPI was up 4.7 percent year-on-year.
INSTAT data show the highest increase was registered in the “food and non-alcoholic beverage” group whose index rose 4.5 percent compared to last January following a sharp 23.5 percent increase in vegetable and potato prices.
Facing shortage of domestic production at the beginning of the year, vegetable prices soared with tomato prices up 45 percent, onions 41.5 percent, peppers 36 percent and potato prices rising 33 percent compared to last Jan.
Cigarette prices whose excise tax has increased by 20 lek per packet starting from this year, continued rising with 3.8 percent even in February 2011. Compared to Jan. 2011, the fuel price increase slowed down with diesel and petrol prices up 1.5 and 1.3 percent respectively. Liquid gas prices also rose 1.1 percent. A slight 1.6 percent increase was also reported for medicines which are being imposed a 10 percent VAT for the first time since Feb. 1 this year. However, experts say the increase will be felt more in the coming months as stock medicines which had entered the country before February were excluded from the new VAT scheme.
Clothes and shoe prices were among the only few articles registering a 0.4 percent drop compared to the previous month.
INSTAT year-on-year data show consumer prices in February 2011 rose up to 22.8 percent for tobacco and 5 percent for alcoholic beverages. Oil and fat prices also rose 15.0 percent followed by sugar and confectionery with 11.5 percent.
Administered prices also underwent a significant increase with water supply tariffs up 28.8 percent year-on-year and hospital services rising by 11.3 percent compared to February 2010.
Meanwhile, clothes and footwear prices dropped by 1.6 percent reflecting the consumers’ saving trend since the beginning of 2010.
Some experts say the 4.5 percent inflation rate published by INSTAT is not realistic, suggesting that fuel and medicine prices have increased far more than what the statistical office says.
The increase in some basic food prices such as bread, cooking oil, sugar and rice, but also liquid gas and fuel is making the life of average Albanians, especially pensioners, the unemployed and those who rely on falling remittances even more difficult in this beginning of 2011.
Starting from this year, Albanian consumers are also facing higher cigarette and medicine prices following a government decision to increase the tobacco excise tax by 20 lek per cigarette pack and impose a 10 percent VAT on medicines.
The opposition Socialist Party blames the situation on monopolies close to government.
During 2010, the inflation rate was problematic only in the first three months when it exceeded the central bank’s target by up to 0.7 percent with the 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.
The central bank says the inflation rate will be kept in check even this year, remaining within the central bank’s 3ѱ target following the 3.4 percent rate in 2010.
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.
