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1000 lek in our pocket no longer has the same value as a year ago. The calculations of the Institute of Statistics show that if we were to enter a store to buy today with this 1000 lek we would receive less products, with the inflation that is “eroding” the value of the lek.
The rise in prices began after the fall of the pandemic and in February this year, reached its highest level in 11 years. People received money from governments while quarantined, and the Central Bank lowered interest rates to record levels, making it very easy to get a loan or make an investment. The turnover of the lek in these conditions was quite high and lending expanded to record levels.
The data show that since 2003, the Bank of Albania has sent interest rates from 8.5%, to the lowest historical record, 0.5% in 2020.
The Bank has not played rates for two years, but with inflation staying above 3 months above the level, intervention may be imminent.
“It is a legal obligation of the Bank to protect us from this tax that steals money from our pockets, which is inflation. In my opinion, the Bank’s intervention is somewhat delayed in these conditions and should have been taken sooner “, says Bardh Sejdarasi.
Albania has had much worse inflationary periods than the current one. In the infamous year 1997, inflation stood at 45%. Foreign currencies such as the dollar went above the psychological level of 200 lek.
A significant percentage of inflation in the country comes from imported goods that are coming more expensive, according to foreign trade statistics, while the rest is being caused by rising prices of raw materials such as fuels, electricity and chemical fertilizers with businesses that are reflecting on basket products.
Albanian exports have expanded significantly during February. Instat data speak of about 37 billion ALL or about 300 million euros of “Made in Albania” goods exported to partner countries.
Compared to a year ago, they expanded by about 97 million euros more, greatly influenced by the strong rise in prices in international markets, while Italy continues to be the main trading partner.
The largest increase was recorded in the group of minerals and fuels, reaching about 78 million euros, almost twice as much as a year ago, while exports of construction materials and metals have expanded significantly.
Although at a slower pace due to the shock it received from the pandemic, it appears that the tailoring industry has shown signs of improvement this year earlier, as the value of textile and footwear exports in February reached 10.6 billion leks, almost 85.5 million euros. While as a 2-month report, they reached ALL 20.7 billion, occupying the main share of total exported goods.
The value of imports also marked a strong increase last month, mainly due to the strong rise in prices for almost all goods in global markets.
According to Instat data, they reached ALL 69 billion last month, driven by higher prices, about ALL 17 billion more than compared to February 2021. Imports were led by the group of machinery, equipment and spare parts, followed by goods food, beverages and tobacco.
In the face of this wave of rising prices, where our country is directly affected as consumption is based on imported goods, on the one hand benefits the state coffers, as consumers are hit for whom living costs have increased as a result of these changes in international markets.
The significant increase in imports has caused the trade deficit, ie the difference between exports and imports to deepen, reaching about ALL 31 billion at the end of February.
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