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Inflation rose again in February to 3.9%, setting a new record for more than a decade.
Rising inflation is increasingly focused on food products, energy and transport services, reflecting the significant rise in prices of these products in international markets. 86% of aggregate inflation for February came from the above three groups.
Inflation of the group “food and non-alcoholic beverages” in February reached 6.9%, following the rapid growth trend that is recording in recent months. A year ago, food inflation was only 3.2%, which clearly shows the high rates of price increase of these products. According to Instat, the products that are more expensive compared to a year ago are those of the subgroup “vegetables including potatoes”, with 16.4%, followed by subgroups “oils and fats” with 10.1%, “fruit” with 7%, bread and cereals ”by 6.8%,“ sugar, jam, honey, chocolate and cakes ”by 6.7%,“ meat ”by 3.9%,“ milk, cheese and eggs ”by 3.3%.
Inflation of the “transport” group for February reached 10.4%, from 9% in January. This reflects the effect of the rapid rise in fuel prices in recent months. Only a year ago, the inflation of the “transport” group was negative, at -3.9%, which clearly proves the sharp reversal of the fuel price trend and the growing risks that this increase is bringing to produce a spiral inflation in the economy.
Inflation of the group “rent, water, fuels, energy” for February was 1.8%, from 1.9% in January. However, compared to this group, the increase in inflation is noticeable compared to a year ago, when the change in the annual consumer price index was 0. To a large extent, the effect of the increase in electricity prices in the markets was amortized by the decision not to pass on this increase to household consumers and small businesses. But for larger businesses, electricity has become much more expensive in recent months. So even though they are not paying more for electricity bills, consumers will be paying part of the price of expensive energy on consumer goods and services bills.
Although in average terms inflation remains lower compared to more developed economies, such as those of the Eurozone or the US, expectations are for a further increase, seeing the upward trend of the producer price index, those of imports or index of foreign inflationary pressures, calculated by the Bank of Albania.
On the other hand, high inflation in the group of food products constitutes a severe blow to the poorest strata of society, where food constitutes a very large part of household expenditures. Rapidly rising energy and fuel prices are exerting ever-increasing production cost pressures on businesses, reflecting on final prices and generating additional inflationary pressures.
By the end of February, inflation had been partially amortized by the strong lek positions in the foreign exchange rate. But with the outbreak of war in Ukraine, the lek is depreciating rapidly against the euro. Currency devaluation is expected to have an even greater effect on tracking imported inflation in the economy./ Monitor
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