Albania’s consumer price index (CPI) increased by 2.4% year on year in October, a slight slowdown compared with the peak of 2.5% the previous month, data from statistics office Instat showed on November 8. Month-on-month inflation stood at 0.1%.
In line with the trend across Europe, Albania’s inflation has accelerated strongly this year as its economy recovers from the shock of the coronavirus (COVID-19) pandemic. Annual inflation in October 2020 was 2.0%, and it fell as low as 0.4% in January 2021.
The biggest contribution to the y/y rise in prices was the food and non-alcoholic beverages category, which contributed 1.33 percentage points (pp).
Other main contributors included transport (0.36 pp) and housing, water, electricity and other fuel (0.24 pp). Most other categories made smaller contributions, except for miscellaneous goods and services, which dragged the index down by 0.03 pp.
Transport prices showed the highest y/y increase at 6.8%, followed by food and non-alcoholic beverages (3.9%), communication (3.2%), recreation and culture (2.7%), clothing and footwear (2.2%), alcoholic beverages and tobacco (1.9%), hotels, coffee-house and restaurants (1.9%), housing, water, electricity and other fuel (1.2%) and furniture household goods and maintenance (0.8%), health (0.8%) and education services (0.4%). Prices of miscellaneous goods and services fell by 0.4%.
On November 3, the Albanian central bank decided to maintain its policy rate at 0.5%, saying that the current monetary policy stance is adequate to support inflation converging to target within 2022.
The latest Quarterly Monetary Policy Report from the central bank shows an increase of inflation, mainly driven by shocks generated from demand and supply bottlenecks in international markets. “The latter are expected to be temporary and their impact on inflation is expected to be transitory. On the other hand, despite edging up, domestic pressures on employment, wages and inflation are still moderate,” the bank commented.