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Core inflation also increased in March, reaching 2.5%

2025-04-22 15:19:00, Ekonomi CNA

Not only headline inflation, but also its core component increased in March.

According to data from the Bank of Albania, core inflation increased to 2.5%, from 2.33% in February. Core inflation also remains on the decline on an annual basis. After falling for the first two months of the year, core inflation returned to growth, but still remains on the decline on an annual basis. In March last year, this indicator was at 2.73%.

Core inflation is calculated by the Bank of Albania for a group of goods and services that account for 69% of the weight in the overall Consumer Price Index basket.

It mainly excludes those products that have high volatility, food and energy products, and its main goal is to strip the overall increase in prices of fluctuations of a shorter-term nature.

Core inflation is linked to a greater extent to domestic inflationary pressures, which after 2022 have been largely influenced by rising business labor costs.

In parallel with core inflation, net core inflation for March also increased to 2.26%, from 2.09% in February. However, net core inflation is also on an annual decline compared to the 3.1% level a year ago.

Net core inflation further excludes processed food subgroups (including bread and cereals) from inflation and is measured at 44.6% of the CPI.

Meanwhile, inflation excluding all food and energy products for March was at slightly lower levels compared to net core inflation, at 2.17%, down from 2.08% in February and 3.05% in March last year.

According to INSTAT, total inflation in the economy, measured for the entire basket of consumer goods and services, returned to growth in March, to 2.1%, from 1.9% in February.

It seems that the increase in inflation in the economy mainly reflects the increase in its basic component. A gradual increase in inflation during this year would be in line with the baseline scenario of the Bank of Albania. The expectation for growth is based on low interest rates and rapid lending to the economy, the stabilization of the lek exchange rate and the mitigation of the downward effect of imported inflation./ Monitor Magazine