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Food does not stop growing, but inflation according to INSTAT stands at 2.1 percent

2024-08-08 13:26:17Biznes SHKRUAR NGA REDAKSIA VOX

Food does not stop growing, but inflation according to INSTAT stands at 2.1

Prices have recorded slow growth even during the month of July, while inflation remains at the lowest levels since June 2021.

However, food prices, which make up the largest portion of the food basket of Albanian families, have continued to rise.

INSTAT reported that the annual change in the consumer price index in July 2024 is 2.1%, a year ago this change was 4.2%.

The monthly change of the consumer price index in July 2024, compared to June 2024, is -0.2%. Even in June, annual inflation was at the level of 2.1%.

Since February, the inflation level remains below the Bank of Albania's objective target of 3%, after the high growth it recorded the previous two years due to the post-pandemic consequences and the increase in stock market prices from Russia's attacks on Ukraine.

In October 2022, inflation reached the highest level since 1998, with 8.3%.

INSTAT announced that the annual increase in prices in July was mainly influenced by the group "Food and non-alcoholic beverages" with +0.68 percentage points, followed by the group "Rent, water, fuel and energy" with +0.43 percentage points.

Also, the prices of the group "Furniture, home appliances and home maintenance" were affected by +0.26 percentage points, the prices of the group "Alcoholic beverages and tobacco" by +0.15 percentage points, the prices of the groups "Clothing and shoes" and "Various goods and services" with +0.12 percentage points each, the prices of the group "Hotels, cafes and restaurants" with +0.10 percentage points, the prices of the "Educational service" group with +0.07 percentage points, the prices of the "Health" group with +0.06 percentage points, the prices of the "Entertainment and culture" group with 0.05 percentage points and the prices of the "Transport" and "Communication" groups with +0.01 percentage points each.

According to INSTAT, Compared to the month of July 2023, the biggest increase in prices is observed in the group "Furniture, home appliances and home maintenance" with 3.5%, followed by the groups "Clothing and shoes" with 3.3%, "Beverages" alcohol and tobacco" with 3.1%, "Rent, water, fuel and energy", "Entertainment and culture" and "Educational service" with 2.2% each, "Miscellaneous goods and services" with 2.1% , "Food and non-alcoholic beverages" and "Hotels, cafes and restaurants" with 1.9% each, "Health" with 1.5%, "Transport" with 0.3% and "Communication" with 0.2%.

Within the food group, the prices of the subgroup "fish" had an increase of 5.4%, followed by the subgroups "milk, cheese and eggs" with 3.5%, "vegetables including potatoes" with 3.4%, "sugar, jam , honey, chocolate and sweets" with 2.8%, "meat" with 2.6%, etc.

In yesterday's meeting, the Supervisory Council of the Bank of Albania has decided to keep the basic rate unchanged at 3%, since in the previous meeting it changed the rate for the first time in three years, reducing the rate by 0.25 percentage points. The base rate is the main instrument the central bank uses to control inflation.

During the press statement, Governor Gent Sejko said that "The volume of economic activity, employment and wages have increased, while inflation marked a significant decrease. This progress suggests that the Albanian economy is leaving behind the consequences of the blow we suffered from the increase in prices in the international markets during the year 2022-2023".

"Consumer price inflation decreased during the second quarter, staying close to the average level of 2.1%.

This performance was dictated almost entirely by the fall in inflation of food items, and in particular of fruits and vegetables, while the inflation of other basket items was generally stable, albeit with a slight downward trend.

From the macroeconomic point of view, the drop in inflation during the second quarter has reflected the rapid reduction of imported inflation, while domestic inflationary pressures appear more stable.

The decline in imported inflation has reflected both the impact of the strengthening exchange rate and the decline in inflation in our trading partners. In particular, the rapid deceleration of food inflation in the country has paralleled a similar development in international markets, suggesting that this development reflects a positive supply shock.

On the other hand, the sustainability of internal inflationary pressures is supported both by the solid demand for goods and services, and by the relatively rapid growth of wages and production costs", said the governor.

According to Sejko, the increase in wages in the private sector generates more income for Albanian families, but it continues to exert pressure on production costs and consumer prices.

"On the other hand, inflation is expected to fluctuate in the lower direction of our target during the second half of the year and gradually return to the target during the first half of next year."

Food does not stop growing, but inflation according to INSTAT stands at 2.1

 


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