At 1.6 percent, inflation rate continues remaining below the Bank of Albania 3ѱ percent target, and reflecting the moderate consumer demand as also unveiled by the sluggish value added tax performance
TIRANA, August 6 – Driven by higher domestic agricultural production, Albania’s inflation rate registered a record low for the past 15 months dropping to 1.6 percent in July 2013, according to the country’s Institute of Statistics INSTAT. At 1.6 percent year-on-year, the Consumer Price Index is at the same level with April 2012 when it emerged on upward trend after record low levels of 0.6 percent and 1 percent in February and March 2012 when a deflationary situation was created because of sluggish demand.
In August 2013, Albania’s consumer price index continues remaining within the central bank’s 3 percent target despite food and non-alcoholic beverage prices registering a 4 percent year-on-year increase in July 2013. Meanwhile, clothes and footwear prices dropped by 4.4 percent year-on-year in July 2013.
The inflation rate in July 2013 dropped by 0.8 percent compared to June 2013. Back in July 2012, the CPI was up by 2.7 percent year-on-year.
Compared to June 2013, “food and non-alcoholic” beverages dropped by 1.7 percent. Within this group the biggest decrease was registered in the “vegetables including potatoes” subgroup which dropped by 16.3 percent. However, fruit prices rose by 7.3 percent compared to last June. INSTAT also reports a drop by 1 percent in the health index mainly as a result of a 1.4 percent drop in medicine prices. The transport index dropped by only 0.1 percent compared to the previous month with diesel and petrol prices down by 0.5 percent and 0.4 percent respectively.
At 1.6 percent, inflation rate continues remaining below the Bank of Albania 3ѱ percent target, and reflecting the moderate consumer demand as also unveiled by the sluggish value added tax performance.
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 have allowed the Bank of Albania to cut the key interest rate by 1.75 percentage points to a historic low of 3.5 percent since September 2011 in an effort to stimulate the economy but the moves have been poorly reflected in lower loan interest rates and an increase in consumption or investments.
