TIRANA, Nov. 10 – Annual inflation rate slightly dropped to 2.1 percent last October on a moderate decline in ‘garment and footwear’ and rental prices and a slowdown in education service prices with the beginning of the new academic year.
However, food and non-alcoholic beverage prices, the key item in the consumer basket, hit a 29-month high of 5.5 percent in October 2015, apparently affected by the launch of a nationwide campaign against informality earlier in Sept. 2015. Experts have warned the campaign could spark a moderate price increase because of rising costs for thousands of newly registered businesses previously operating informally reflected on consumer prices.
Food and non-alcoholic beverages, which a recent INSTAT survey has shown take the majority 44 percent of Albanian households’ monthly budgets, were up from 4.9 percent last September and 1.6 percent in Nov. 2014, registering a record high since April 2013 when they hit 5.7 percent. Within this group, food prices rose by 5.7 percent year-on-year in November, compared to a 2.1 percent increase in oil and fats a record 28 percent rise in ‘vegetables including potato’ prices and a 15.4 percent hike in fruit prices.
Garment and footwear prices extended their decline to 3.7 percent last October, hinting poor consumer demand. “Furniture, household equipment and routine household maintenance” prices were down by 0.4 percent, registering consecutive modest negative growths since October 2013.
Albania’s inflation rate during the first three quarters of this year accelerated to 1.87 percent, up from 1.74 percent during the same period last year.
From a macroeconomic point of view, the slow increase in prices reflects the impact of sluggish aggregate demand and relatively low prices in global markets, says central bank.
The Bank of Albania expects inflation rate to remain below its 3 percent target, which is estimated to have a positive impact on the country’s growth, until early 2018.
The Albanian government expects the inflation rate to accelerate to 2.1 percent in 2015 after it hit a 15-year low of 1.6 percent in 2014, hinting sluggish demand and private investments.
The Albanian government and international financial institutions such as the IMF and the World Bank expect the country’s economy to accelerate to 2.7 percent this year, up from around 2 percent in 2014 on lower international oil prices affecting exports and spillover effects from the crisis in neighbouring Greece.
