TIRANA, Oct. 12 – Albania’s inflation rate picked up to an average of 2.1 percent in the first three quarters of this year, up 1 percent compared to the same period last year as global food and oil prices recovered with a considerable impact on local consumer prices.
The inflation rate in the first nine months of this year was triggered by a 4 percent hike in “food and non-alcoholic” beverage prices, the main item in the consumer basket, and fuel prices increasing by an average of 4.3 percent as international oil prices increased to about $50 a barrel, up from up from a 12-year low of $30 a barrel in early 2016.
The FAO food price index, a measure of the monthly change in international prices of five commodity groups, was up by an annual 4.3 percent last September, affecting Albania as a net importer.
The inflation rate in August and September 2017 dropped to a 10-month low of 1.6 percent as Europe’s single currency also dropped to an 8-year low of 132.4 lek amid tourism effects increasing the Euro supply, a situation also making the country’s imports much cheaper.
The inflation rate is yet below the central bank’s 3 percent target rate, estimated to have a positive impact on the country’s GDP growth.
The Albanian economy grew by 4 percent in the first half of this year, mainly as a result of some large energy-related projects, but household consumption grew at a twice lower pace, signaling uncertainties in a pre-election period and an ongoing saving trend and unwillingness to invest as indicated by the poor performance of business and household loans.
“The return of the economy to its potential and the gradual absorption of unutilized capacities is expected to be accompanied with the gradual hike in inflation which is expected to achieve its 3 percent target by 2018,” central bank governor Gent Sejko as the central bank decided to keep the key interest rate unchanged at 1.25 percent for the 17th month in a row in a bid to stimulate sluggish consumption and investments by discoursing investments in traditional instruments such as deposits whose interest rates are slightly above zero and government securities whose yields stand slightly above inflation rate.
Albania’s annual average inflation rate hit a 16-year low of 1.3 percent in 2016, reflecting a slump in global oil and food prices, but also sluggish domestic consumption as the economy is estimated to have grown by slightly above 3 percent, mainly thanks to major energy-related investment.
The country’s inflation rate was on par with other Western Balkans enlargement countries and slightly above zero in the euro area.
Albania’s average inflation rate fluctuated at about 2 percent from 2012 to 2015 compared to 3 percent in 2007-2010.
