The pace of price growth has significantly slowed down this year in Albania. INSTAT has revealed that inflation, which measures the change in prices for a specific basket of consumer goods, decreased to 2.1% in April from 2.3% the previous month and 4.6% in the same period a year ago, Monitor reports.
This marks the lowest level of inflation since May 2021, when both the domestic and global economies were recovering from the pandemic.
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| A man surprised by the price increase after seeing the grocery bill in a supermarket (archive) |
Subsequently, prices started to rise again, partly due to supply chain disruptions caused by the pandemic. In 2022, tightening intensified, further fueled by the repercussions of Russia's attacks on Ukraine in global energy and food markets.
In October 2022, inflation in the country reached 8.3%, the highest level since 1998 when the country suffered the consequences of pyramid schemes. In 2023, price increases eased significantly, slowing down in the first half of 2024, aided by the decline in inflation in Europe, our main trading partner.
In an attempt to combat inflation, the Bank of Albania, whose primary objective is to maintain price stability, tightened monetary policy by increasing the base rate from 0.5% in March 2022 to 3.25% currently. Now, inflation has fallen below the Bank of Albania's targeted objective of 3%, but the central bank has not yet initiated easing monetary policy.
Food is the group that has the highest impact on price increases.
According to INSTAT, the annual increase in prices in April was mainly influenced by the group "Food and non-alcoholic beverages" with +0.52 percentage points, followed by the group "Rent, water, fuel and energy" with +0.44 percentage points. Also, prices of the group "Furniture, household appliances and home maintenance" contributed with +0.26 percentage points, prices of the group "Alcoholic beverages and tobacco" with +0.16 percentage points, prices of the groups "Hotels, cafes and restaurants" and "Goods and miscellaneous services" with +0.15 percentage points each, prices of the group "Clothing and footwear" with +0.12 percentage points, prices of the group "Entertainment and culture" with +0.10 percentage points, prices of the group "Health" with +0.07 percentage points, prices of the groups "Transport" and "Educational services" with 0.06 percentage points each.
Annual changes in major groups: Compared to April 2023, the highest price increase is observed in the group "Entertainment and culture" with 4.4%, followed by the groups "Furniture, household appliances and home maintenance" with 3.5%, "Clothing and footwear" with 3.4%, "Alcoholic beverages and tobacco" with 3.3%, "Hotels, cafes and restaurants" with 3.2%, "Goods and miscellaneous services" with 2.7%, "Rent, water, fuel and energy" with 2.3%, "Educational services" with 2.2%, "Health" with 1.7%, "Food and non-alcoholic beverages" with 1.5% and "Transport" with 1.0%. Within the food group, prices of the subgroup "vegetables including potatoes" increased by 5.4%, followed by subgroups "fish" by 5.2%, "sugar, jam, honey, chocolate and sweets" by 4.1%, "milk, cheese and eggs" by 3.6%, "meat" by 2.4%, etc.
Monthly changes in major groups: Compared to March 2024, prices of the group "Food and non-alcoholic beverages" decreased by 0.7%. On the other hand, prices of the group "Entertainment and culture" increased by 1.1%, followed by the groups "Alcoholic beverages and tobacco" by 0.5%, "Furniture, household appliances and home maintenance", "Transport" and "Hotels, cafes and restaurants" by 0.2% each, "Clothing and footwear", "Health" and "Goods and miscellaneous services" by 0.1% each.