TIRANA, Feb. 10 – Albania’s inflation rate hit a 5-month low of 1.5 percent in January 2016 fuelled by lower oil, rental, clothes and footwear and medicine prices, according to a report published by state statistical institute, INSTAT.
At 1.5 percent, the inflation rate remains significantly below the central bank’s 3 percent target estimated to have a positive effect on consumption and investments.
“Food and non-alcoholic beverages,” the key item in the consumer basket, had the major 1.55 percentage point contribution to the annual increase of consumer prices.
“Education service” prices, which registered the highest annual increase of 4.8 percent following a hike in public university fees, had a 0.19 percentage point contribution to the January inflation rate.
Although remaining one of Europe’s highest at a time when international oil prices have dropped to record lows, diesel and petrol prices fell by 5.8 percent and 5.6 percent respectively compared to last December, INSAT said.
Back in January 2015, the inflation rate was at 1.3 percent after hitting a 3-year low of 0.7 percent in December 2014, sparking deflation concerns.
Albania’s annual inflation rate slightly accelerated to 1.95 percent in 2015 after hitting a 15-year low of 1.6 percent in 2014, yet standing 1 percent below the central bank’s 3 percent target which is estimated to have a positive impact on the country’s economic growth, according to INSTAT.
The situation hints sluggish demand and private investments, the two key drivers of the Albanian’s growth, at a time when the economy has been suffering sluggish growth rates of 1 to 2 percent in the past three years.
The low inflation pressure allowed the country’s central bank to cut the key interest rate twice in 2015, reducing it to a historic low of 1.75 percent, but failing to boost sluggish lending and consumption.
