Inflation rate unchanged at 1.7% in October

TIRANA, Nov. 6 – Albania’s inflation rate remained unchanged at 1.7 percent in October 2013, reflecting sluggish domestic consumption as also unveiled by the poor performance of the value added tax. At 1.7 percent, the inflation rate registered one of the lowest growth rates for this year, except for July and August when it was at 1.6 percent and 1.2 percent respectively, considerably below the central bank’s target of 3 percent. Back in October 2012, the inflation rate was up by 2.4 percent.
INSTAT data show ‘food and non-alcoholic beverages,’ which is the main component of the consumer price index, rose by 3.5 percent year-on-year in October 2013, down from 3.9 percent in September 2013 and 3.4 percent in October 2012.
Year-on-year, alcoholic beverages and tobacco prices rose by 1.2 percent and the ‘hotel, coffee and restaurant’ index rose by 3 percent. Garment and footwear prices dropped by 3.8 percent while rental prices rose by 1.1 percent.
The inflation rate which has been on a downward trend since last February continues remaining below the central bank’s 3 percent target, reflecting the moderate consumer demand as also unveiled by the sluggish performance of the value added tax.
Albania’s central bank itself estimates that by preserving the inflation rate around the 3 percent rate, the monetary policy will continue having a 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 1.75 percentage points to a historic low of 3.5 percent since September 2011 in an effort to stimulate the economy but the moves have been poorly reflected in lower loan interest rates and an increase in consumption or investments.