TIRANA, March 8 – Albania’s inflation rate slowed down last February as the country overcame the coldest January in three decades with a negative impact on domestic greenhouse production.
Data published by the country’s state statistical institute, INSTAT, shows consumer prices slowed down to 2.2 percent last February after hitting a 5-year high of 2.8 percent in January 2017, mainly triggered by a hike in fuel prices and higher liquid gas prices following the introduction of an excise tax meant only for liquid gas powered vehicles, but which is affecting almost all gas consumers.
With the FAO Food Price Index, a measure of the monthly change in international prices of five commodity groups, at a two-year high, Albania’s inflation rate picked up to an average of 2.5 percent in the first couple of months of this year, in line with the central bank’s 3 percent target, and up from 0.85 during the same period last year when the country was heading toward deflation, following a Eurozone and regional trend, due to record low international and oil prices.
Back in February 2016, Albania’s inflation rate hit a 13-year low of 0.2 percent significantly below the central bank’s 3 percent target, sparking deflation concerns.
Food and non-alcoholic beverages, the main item in the consumer prices, slowed down to a 3.9 percent increase last February with a 1.57 percentage point contribution to the annual inflation rate. Within this group, “vegetable including potato” prices rose by an annual of about 13 percent, down from a record 25 hike last January when freezing temperatures almost paralyzed domestic greenhouse production, increasing reliance on imports.
Transport prices also increased to 3.2 percent as domestic fuel prices slightly increased following a hike in international oil prices. Liquid gas prices have increased by an average of 40 percent from last December following the introduction of an 8 lek (€0.06)/litre excise rate on vehicle liquid gas and higher international prices, affecting both households and businesses that massively use liquid gas as a cheaper alternative to electricity.
With few authorized gas points for household use, LPG continues being massively traded in cylinders from the same filling stations for both car and household consumption, despite warnings by authorities to stop sales to households from vehicle gas points in fuel stations.
Meanwhile, producer prices, measuring price changes from the makers of a product, grew by 0.9 percent year-on-year in the final quarter of 2016, mainly due to a 5.5 percent hike in producer prices for the extractive industry, one of Albania’s key industries which has been suffering since the mid-2014 slump in commodity prices but is gradually recovering as oil and mineral prices pick up.
Albania’s annual average inflation rate hit a 16-year low of 1.3 percent in 2016, reflecting a slump in global oil and food prices, but also sluggish domestic consumption as the economy is estimated to have grown by slightly above 3 percent, mainly thanks to major energy-related investment.
The central bank, which has been keeping the key rate at a historic low of 1.25 percent due to low inflation pressure says the gradual recovery of the Albanian economy will also lead to a gradual recovery in consumer prices and inflation rate is expected to pick up to its 3 percent target by late 2018.
