Rising consumer prices impoverishing Albanians

TIRANA, Feb. 8 – The increase in some basic food product prices such as bread, cooking oil, sugar and rice, but also liquid gas and fuel is making the life of average Albanians, especially pensioners, the unemployed and those who rely on declining remittances even more difficult in this beginning of 2011.
The situation is a result of a sharp rise in basic product prices in international markets where Albania is a net importer but also the high tax burden applied to these products. Bread producers have warned prices will undergo another 10 lek increase as wheat and flour prices soar because of lower production and exports from the world’s main producers. Local producers say the increase in bread prices, is unavoidable as long as prices in international markets, where Albania imports 85 percent of its wheat needs, continue rising.
Currently, a standard loaf of bread of 800 grams costs 80 lek in most bakeries, up from 70 lek few months ago. The Agri-food Traders Union has dismissed accusations of abuses, saying that the price increases were only the reflection of what’s happening in international stock markets.
The prices can be kept at the current rates only if the 2 percent customs duty and the 20 percent VAT on wheat import is reviewed.
Governor Fullani said the rise in wheat prices in international markets which have already caused bread price increases is expected to have minor effects in the overall inflation rate, whose target is 3ѱ percent.
Meanwhile, cooking oil prices have climbed to 240 lek/litre, flour at 80-85 lek/kg, sugar at 150 lek/kg and rice 180 lek registering increases of at least 20 lek each during the past two months. Vegetable and potato prices have also registered a sharp increase with potato and onion prices at 70 lek and 100 lek/kg respectively.
In addition, increased fuel and liquid gas prices are also increasing the daily expenditure of Albanian consumers.
Oil prices continue remaining at their highest historical levels in Albania even during the beginning of this year with diesel and petrol sold in some petrol stations up to 170 lek/litre (1.55 dollars). Experts explain the situation with soaring prices in international markets where prices are reported to have reached up to 100 dollars per barrel, and the depreciation of the national currency, lek, against the US dollar and the euro.
The situation for liquid gas which is commonly used as a cheaper alternative to electricity for cooking and heating appears the same. Gas prices have increased by another 20 lek per litre during the past few months but the situation could further deteriorate following a government decision to install cash registers in wholesale and retail sale points. Liquid gas companies operating in Albania have strongly opposed a Finance Ministry decision which obliges them to install new costly cash registers measuring gas in litres and not kg as they currently do.
Starting from this year, Albanian consumers are also facing higher cigarette and medicine prices following a government decision to increase the excise tax by 20 lek/cigarette pack and impose a 10 percent VAT on medicines.
Albania’s price level index (PLI) for food and non-alcoholic beverages stands at 72 percent of the EU 27, considerably more expensive compared to neighbouring Macedonia, an already EU candidate country, whose index was at 52 percent, and even some EU members such as Poland, Romania, Bulgaria, according to Eurostat. Albania’s index in this category is sandwiched between Serbia and Lithuania, where food and non-alcoholic beverages are at 70% and 74% of the EU average respectively, said a recently published Eurostat survey comparing price levels in 37 European countries for 2009.
Despite significantly lower food and tobacco prices compared to the other 36 countries covered in the survey, Albania’s price levels for non-alcoholic and alcoholic beverages are considerably high compared to some regional and EU countries.
Albania’s food, bread and cereals, and meat, and fish prices are relatively low, at an average of 70 percent of the EU 27. However, milk, cheese and eggs prices stand relatively high at 90 percent of the EU average, considerably higher than many countries and bottom-placed Macedonia at 60 percent.
The survey also measured “oils and fats” are relatively high at 93 percent of the EU average compared to 61 percent for “fruits, vegetables and potatoes.”
Meanwhile, Albania’s Gross Domestic Product (GDP) per inhabitant expressed in purchasing power standards (PPS) is less than one third of the EU-27 average and even below regional competitor Bosnia and Herzegovina which stood at 31 percent in 2009, according to recent data published by Eurostat.
Latest Eurostat data show Albania GDP per capita dropped to 2,661 euros in 2009, down from 2,784 in 2008, remaining better only compared to Kosovo which registered 1,790 euros compared to the EU 27 average of 23,500 euros.