In early 2011, consumer prices in Albania, a net food importer, were affected by global food prices shrinking the buying power of thousands of poor families
TIRANA, Aug. 16 – Tobacco, cooking oil, bread and grain prices registered the highest year-on-year increases during the first seven months of this year. Latest INSTAT data show tobacco prices were up 18.3 percent year-on-year in July 2011, bread and grain prices grew by 15.7 percent while cooking oil and fat prices rose by 13.5 percent.
The increase in tobacco prices was a result of higher excise tax imposed starting from January of this year, when the excise tax for a cigarette pack rose by 20 lek to 70 lek. However, what’s most concerning is the sharp increase in basic products such as bread, cooking oil and sugar– which mostly affect Albania’s poorer population. Sugar prices registered a 10.7 percent increase in July 2011.
Cooking oil prices have climbed to 240 lek/litre, flour at 80-85 lek/kg, sugar at 150 lek/kg and rice at 180 lek registering increases of at least 20 lek each during the past two months.
Vegetables, including potatoes, were the products registering the highest year-on-year decrease of 12.5 percent in July 2011 thanks to increased domestic production.
Taken as a group, consumer prices registered their highest increase in alcoholic beverages and tobacco at 11.3 percent, followed by food and non-alcoholic beverages at 5.3 percent, transport at 5.1 percent and health at 4.4 percent.
Clothes, shoes and educational services were the only groups registering slight decreases of 1.6 percent and 0.3 percent respectively.
Kseniya Lvovsky, the World Bank country manager for Albania says Albania is less vulnerable to global food prices than poorer countries, where large shares of the population are below the poverty level and may spend 70 or higher percentage of their income on food, which consists mainly of bread and cereals. According to her, in Albania, the poorest 20 percent of households spend about 20 percent of their budgets on bread and cereals, which constitutes about 30 percent of their total food budget. “These households can feel the impact of price shocks. To compare, the richest 20 percent spend 5 percent of total expenditures and 11 percent of the food budget on bread and cereals. What really counts is the effectiveness of measures to protect the poor.”
Despite the sharp increase in some basic products, the inflation rate in July 2011 dropped to 3.6 percent remaining near the central bank’s target band of 3ѱ percent for the second month in a row. Inflation remained above the 4 percent from February to May 2011 exceeding the Bank of Albania’s target by up to 0.5 percent. The highest level was registered last February when the Consumer Price Index rose 4.5 percent year-on-year.
The Bank of Albania says the inflation rate will return to normal by the end of this year.
Central bank governor Ardian Fullani says the inflation rate is expected to get back to the central bank’s 3ѱ target band by year-end explaining that “the effect of the shocks of foreign prices will wane while the effect of administered prices will cease in the third quarter.”
World Bank: Near record high global food prices
Global food prices are at high levels and when combined with continued volatility, put the poorest people in the developing world at continued risk, according to the World Bank Group’s Food Price Watch released this week.
The Food Price Watch says global food prices in July 2011 remain significantly higher than a year ago. Prices overall remained 33 percent higher than a year ago with commodities such as corn (up 84 percent), sugar (up 62 percent), wheat (up 55 percent) and soybean oil (up 47 percent) contributing to the increase. Crude oil prices are 45 percent higher from July 2010 levels, affecting production costs and the price of fertilizers– which increased by 67 percent over the same period. Prices from April through July settled roughly five percent below the recent spike in February 2011 due to modest declines in grains, fats and oil, and other foods such as meat, fruits, and sugar. However, prices of some commodities remained volatile during this period. For example, corn and wheat prices declined in June and then increased in the first half of July. The price of rice fell from February to May, but has since increased.
