Inflation rate drops to 1.5%

TIRANA, Oct. 8 – Albania’s annual inflation rate dropped to 1.5 percent in September 2014, remaining below the central bank’s lower limit of the target range of 2 to 4 percent for the sixth month in a row. The situation reflects poor demand as the Albanian economy continues facing sluggish growth, with the estimated growth in the first half of this year at only 0.5 percent after the GDP slightly contracted in the second quarter of the year.
For the first three quarters of 2014, average inflation rate is estimated at 1.75 percent, remaining below the central bank’s mid-term target of 3 percent.
Albania’s central bank estimates that by preserving the inflation rate at around the 3 percent rate, the monetary policy will continue having a positive contribution to the development of the Albanian economy. “This targeted inflation rate and the monetary policy applied for its achievement, positively affects the stability of economic growth rates as has been proved in recent years,” says the central bank.
Data published by the country’s Institute of Statistics this week show inflation rate decelerated to 1.5 percent in Sept. 2014, down from 2 percent last August, fuelled by a 2.1 percent rise in food and non-alcoholic beverages, the most important item in the consumer basket. The biggest annual price increases in September 2014 were reported in “different goods and services” with 8.7 percent, mainly as a result of sharp rise in compulsory auto insurance, followed by “alcoholic beverages and tobacco” with 6.8 percent due to a 12 percent increase in tobacco prices fuelled by higher excise duty.
Health, “clothes and footwear” and communication prices dropped by 5.7 percent, 1.9 percent and 0.3 percent respectively year-on-year in August 2014, INSTAT reported. The moderate drop in health prices is a result of the lift of the 10 percent VAT on medicines and health services since April 2014.
The annual inflation rate in 2013 was estimated at around 1.9 percent, down from 2 percent in 2012, but far lower compared to 3.5 percent in 2011 and 3.6 percent in 2010.