Not only food, other products are also becoming more expensive

2025-08-21 07:31:00, Ekonomi CNA

Core inflation rose for the fifth consecutive month in July and has reached its highest levels since the beginning of 2024.

According to data from the Bank of Albania, core inflation increased to 2.91%, from 2.69% in June. Core inflation has also outlined a stable upward trend on an annual basis. In June last year, it was at 2.29%.

The sub-basket measuring core inflation has been slightly expanded with the revision of weights in 2025, to 69.6% of the total CPI basket, from 69% in 2024.

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

In its latest monetary policy report, the Bank of Albania assessed that inflation continues to be below the 3% target, affected by the decline in external inflation, the appreciation of the exchange rate and repeated supply shocks. However, domestic inflationary pressures remain stable, suggesting that economic activity is close to potential.

According to the Bank of Albania, core inflation remains above total inflation and above its average of the last decade, while domestic inflation exceeded the total inflation value in June and continues to remain above the respective average, starting from March of this year. These assessments confirm the stability of inflationary pressures, but, nevertheless, in July, the Bank of Albania decided to lower the key interest rate from 2.75% to 2.5%. This was the third reduction of the key interest rate in the space of a year.

The continued increase in core inflation to the 3% limit could be a signal of a new change in the monetary policy course in the coming months.

In parallel with core inflation, net core inflation for June also increased to 3.04%, from 2.45% in June. 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 July increased to 2.94%, from 2.45% in June.

According to INSTAT, total inflation in the economy, measured for the entire basket of consumer goods and services for July, increased further to 2.5%, from 2.4% in June and 2.1% a year earlier./ Monitor