Consumer prices slightly increase to 1.7% in September

TIRANA, Oct. 7 – Consumer prices slightly jumped to 1.7 percent year-on-year in September 2013 on higher food and non-alcoholic beverage prices as domestic agricultural production ended its positive contribution. At 1.7 percent, the inflation rate registered one of the lowest growth rates for this year, except for July and August when it was at 1.6 percent and 1.2 percent respectively, considerably below the central bank’s target of 3 percent. Back in September 2012, the inflation rate was up by 2.6 percent.
Compared to August 2013, food and non-alcoholic beverage prices rose by 1.6 percent. The biggest increase was registered in the ‘vegetables including potatoes’ subgroup which rose by 7.6 percent. Diesel and petrol prices dropped by 0.3 percent and 0.4 percent respectively compared to August 2013.
A decrease in food and alcoholic beverage prices, which was mainly a result of the domestic agricultural production at its peak, positively contributed to the inflation rate in August 2013 which at 1.2 percent registered a 17-month low. INSTAT data show ‘food and non-alcoholic beverages,’ which is the main component of the consumer price index, rose by 3.9 percent year-on-year in September 2013, up from 2.8 percent in August 2013 and 4.2 percent in September 2012.
Year-on-year, alcoholic beverages and tobacco prices rose by 2.4 percent and the ‘hotel, coffee and restaurant’ index rose by 3.1 percent. Garment and footwear prices dropped by 3.7 percent while rental prices rose by 1.1 percent.
The inflation rate which has been on a downward trend since last February continues remaining below the central bank’s 3 percent target, reflecting the moderate consumer demand as also unveiled by the sluggish performance of the value added tax.
Albania’s central bank itself estimates that by preserving the inflation rate around the 3 percent rate, the monetary policy will continue having a 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.