Inflation drops to 1.4%, lower energy and transportation prices, higher for food

08/07/2015 00:00

The Institution of Statistics (INSTAT) reported that the inflation rate
dropped in June for the second consequent year, going at 1.4%. The
annual price increase in the April and May was respectively 2.3 and
1.8%.

INSTAT said that the low inflation rate is still being dictated by energy, clothes and transportation services, which have lower prices than one year ago.

Health related prices are also lower, keeping the growth of the cost of living still low.

But on the other hand, prices of food, alcoholic beverages, smoking and education. INSTAT says that food prices explain 1.07% of the inflation level, from 1.4% of the total quota. This means that 75% of the growth of the cost of life during the past year has come from food products.

However, the 1.4% annual inflation level is low and below the legal objective of the Bank of Albania. The Bank prefers to have a price growth of 2% to 4% each year, since they see it as necessary to increase the economy.

For more than two years, the monetary central authority has failed to return inflation within the legal objective, although the basic rate has been reduced 13 times, in the efforts to accelerate the price growth. Despite the record-breaking reduction of the interests, the price growth has been under 2%, reflecting the reduced consumption of citizens, businesses, and the low economic growth.

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