TIRANA, June 8 – Albania’s inflation rate hit a four-month low of 1.8 percent last May on lower food and non-alcoholic beverage prices, the key item in the consumer basket, state statistical institute, INSTAT, said in its monthly report.
Lower prices of clothes, rents, eggs, medicine and transport continue keeping the inflation rate below the central bank’s 3 percent target rate, which is estimated to have a positive impact on consumption and private investments, the two key drivers of Albania’s growth.
Albania’s inflation rate is estimated to have increased by around 2 percent in the first five months of this year, up from around 1.8 percent during the same period last year.
Food and non-alcoholic beverage prices, the key item in the consumer basket, had the biggest 1.48 percentage point impact on the annual increase of consumer prices last May. Within this group, “vegetables including potato” prices were up by 11.2 percent year-on-year, while fruit prices grew by 16.3 percent, says INSTAT.
The massive floods that hit Albania last February have also had an impact on agriculture products. Experts had warned lower domestic production of vegetables due to the floods last February would increase reliance on imported products which are 10 to 15 percent more expensive.
“The incomplete utilization of the labor market and production capacity among businesses is keeping the economic activity below its potential and the inflation rate below the central bank’s target,” says the Bank of Albania in a report.
The Albanian government expects the inflation rate to accelerate to 2.5 percent in 2015 after it hit a 15-year low of 1.6 percent in 2014, hinting sluggish demand and private investments.
Albania’s central bank estimates that by preserving the inflation rate at around the 3 percent rate, the monetary policy will continue having a positive contribution to the development of the Albanian economy.
The Albanian government and international financial institutions such as the IMF and the World Bank expect the country’s economy to accelerate to 3 percent this year, up from around 2 percent in 2014.
