Inflation rate remains within BoA target

TIRANA, April 7 – Inflation rate continues remaining below the Bank of Albania 3 percent target, reflecting the moderate consumer demand as also unveiled by the sluggish retail sales. INSTAT reports the Consumer Price Index was up 2.4 percent year-on-year in March 2013 driven by a 5.6 percent increase in the food and non-alcoholic beverages prices and a 3.6 percent rise in alcoholic beverages and tobacco prices.
In March 2012, inflation rate was up by only 1 percent, raising concerns about deflation risks. Clothes and footwear was the only category to register a 3.4 percent drop in prices in February 2013. The rent, water fuel and energy index also declined by 0.5 percent year-on-year.
Fuel prices which currently stand at record levels of around 190 lek/litre slightly dropped by 0.1 percent both for diesel and petrol, compared to the previous month.
Albania’s annual inflation rate dropped to 2 percent in 2012, down from 3.5 percent in 2011. Albania’s central bank itself estimates that by preserving the inflation rate around the 3 percent rate, the monetary policy will continue having positive contribution to the development of the Albanian economy.
Low inflation pressures have allowed the Bank of Albania to cut the key interest rate by 1.5 percentage points to a historic low of 3.75 percent since Sept. 2011 in an effort to stimulate the economy but the moves have been poorly reflected in lower loan interest rates and an increase in investments.