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Price growth slows, inflation drops to 2.6 percent, lowest level since October 2021

2024-03-08 13:03:52Biznes SHKRUAR NGA REDAKSIA VOX

Price growth slows, inflation drops to 2.6 percent, lowest level since October

After easing to 3.4 in January, from 4% at the end of 2023, inflation, which measures the change in the main basket of consumer goods, fell to 2.6% in February.

This is the lowest level since October 2021, before a wave of price increases began, first as a result of supply problems created by the pandemic and then from market disruptions as a result of Russia's attacks on Ukraine.

The drop in inflation was also influenced by its progress in Europe, making suppliers buy imports cheaper, while they are also favored by the fall of the euro in the domestic market. Eurostat earlier announced that inflation in the eurozone fell to 2.6% in February, although its decline was lower than expected.

In the domestic market, inflation has fallen below the Bank of Albania's target of 3%, making the further tightening of monetary policy by the Bank of Albania unnecessary, as predicted at the end of the year and as advised by the International Monetary Fund.

At the last meeting, at the beginning of February, the Supervisory Council of the Bank of Albania decided to keep the basic interest rate unchanged, at the level of 3.25%.

The governor of the Bank of Albania, Gent Sejko, said at the beginning of February, that however, although decreasing, internal inflationary pressures remain relatively high and are not yet in line with our objective of price stability.

This trend is dictated by the relatively high demand for goods and services, which keeps profit margins high, as well as by the rapid increase in wages, which is further translated into increased production costs.

Since March 2022, the Bank of Albania has increased the base rate seven times, from 0.5% to 3.25%, as its main instrument to fight inflation. The last intervention was in November 2023, when the rate was increased by 0.25 percentage points.

Price growth slows, inflation drops to 2.6 percent, lowest level since October

Foods continue to get more expensive, but so does entertainment

According to INSTAT, the annual price increase in February was mainly influenced by the group "Food and non-alcoholic beverages" with +0.96 percentage points, followed by the group "Rent, water, fuel and energy" with +0.45 percentage points. Also, the prices of the group "Furniture, home appliances and home maintenance" were affected by +0.35 percentage points, the prices of the group "Miscellaneous goods and services" by +0.19 percentage points, the prices of the group "Alcoholic beverages and tobacco" ” with +0.18 percentage points, the prices of the “Hotels, cafes and restaurants” group with +0.17 percentage points, the prices of the “Clothing and shoes” group with +0.12 percentage points, the prices of the “Entertainment and culture” group ” with +0.11 percentage points, the prices of the group “Health” with +0.07 percentage points, the prices of the group “Educational service” with +0.06 percentage points and the prices of the group “Communication” with +0.01 points percentage. The prices of the "Transport" group have contributed with -0.10 percentage points.

According to INSTAT, Compared to the month of February 2023, the biggest increase in prices is observed in the group "Entertainment and culture" with 4.9%, followed by the groups "Furniture, home appliances and home maintenance" with 4.7%, "Hotels , cafes and restaurants" with 3.8%, "Alcoholic beverages and tobacco" with 3.7%, "Miscellaneous goods and services" with 3.5%, "Clothing and shoes" with 3.4%, "Food and non-alcoholic beverages" with 2.7%, "Rent, water, fuel and energy" with 2.4%, "Educational service" with 2.2%, "Health" with 1.9% and "Communication" with 0, 3%. On the other hand, the prices of the "Transporti" group decreased by 1.6%.

Within the food group, the prices of the subgroup "milk, cheese and eggs" increased by 4.7%, followed by the subgroups "vegetables including potatoes" by 4.6%, "meat" and "fish" by 4.2% each, "sugar, jam, honey, chocolate and sweets" with 3.6%, "fruit" with 2.9%, etc.


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