Fullani: Rising food prices mostly affecting the poor

TIRANA, Feb. 23 – The increase in food and diesel prices in Albania after the hike in international markets is mostly affecting low-income families, central bank governor Ardian Fullani said on Wednesday in a press conference. Rising food and oil prices accounted for 80 percent of the 3.3 percent inflation rate in January 2011, which dropped by 0.1 percent compared to December 2010 also because of no increase in administrated prices, said Fullani. However, the central bank expects inflation rate even during this year to remain within its 3ѱ target band.
Commenting on the economic developments, governor Fullani said last year’s economic growth was mainly supported by the boom of exports. Meanwhile, domestic and private investments slowed down in 2010 because of high insecurity levels and tight lending standards.
The central bank’s Supervisory Council decided to keep the repo rate unchanged at 5 percent describing the monetary conditions as appropriate to meet the inflation objective for the mid-term period.
The Bank of Albania says that insufficient demand will continue keeping the country capacity utilization rates below their potentials and have a lowering effect on inflation despite rising prices in international markets.
The Albanian government expects the country’s economy to grow by 4.1 percent in 2010 and 5.5 percent in 2011 which is almost twice higher compared to what international financial institutions project.
Latest INSTAT data show the country’s GDP in the third trimester of 2010 grew by 4.9 percent year-on-year and 1.6 percent compared to the second quarter.
Industry, transport, services, trade and agriculture were the drivers of the economic expansion while the construction and post-telecommunication continued suffering registering negative growth rates.
After shrinking by 0.8 percent in the last quarter of 2009, the economy managed to return to positive rates, registering year-on-year growth rates of 2 percent in the first quarter of 2010 and 3.3 percent in the second quarter.