Inflation rate remains within BoA target

TIRANA, Oct. 8 – Inflation rate continues remaining below the Bank of Albania three percent target, reflecting the poor consumer demand as also evidenced by shrinking retail sales. INSTAT reports the Consumer Price Index was up 2.6 percent year-on-year in Sept. 2012 driven by a 4.2 percent increase in the food and non-alcoholic beverages and a 2.6 percent rise in alcoholic beverages and tobacco prices. Clothes and footwear was the only category to register a 2.1 percent drop in prices.
Fuel prices which currently stand at record levels of around 200 lek/litre registered another increase in Sept. 2012 when they rose by an average of 2 percent compared to the previous months.
For the first eight months of 2012, inflation rate rose by an average of 2 percent year-on-year.
At an unusual record low for the beginning of the year, and failing to stimulate consumer demand, experts warned earlier this year the Albanian economy was heading to deflation risks. Albania’s central bank itself estimates that by preserving the inflation rate around the 3 percent rate, the monetary policy will continue having positive contribution to the development of the Albanian economy. Low inflation pressures, on a downward trend since the second half of 2011, have allowed the Bank of Albania to cut the key interest rate by 1.25 percentage point to a historical record low of 4 percent since Sept. 2011 in an effort to stimulate the economy but the moves have been hardly reflected in lower loan interest rates and an increase investments.