Prices are rising, even though they don't officially appear to be.

2025-12-08 07:41:00, Ekonomi CNA

Core inflation rose again in October and reached the highest level in the last two years.

According to data from the Bank of Albania, core inflation increased to 3.13%, from 3.07% in September. Core inflation also deepened its annual growth. In October last year, core inflation was at 2.19%.

The sub-basket that measures core inflation is calculated on a group of products and services that constitute 69.6% of the total Consumer Price Index basket.

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 parallel with core inflation, net core inflation for October also increased to 3.5%, from 3.4% in September and also remains on the rise compared to the level of 2% a year earlier.

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 October increased to 3.36%, from 3.28% in September.

According to INSTAT, total inflation in the economy, measured for the entire basket of consumer goods and services for October fell to 2.3%, from 2.4% in September, but up from the level of 1.9% a year earlier.

In the monetary policy report for the fourth quarter of the year, the Bank of Albania assesses that domestic inflationary pressures have strengthened, reflecting the expansion of economic activity, tight conditions in the labor market, and the increase in rental prices.

The analysis of inflation by main basket categories showed that the prices of the most stable inflation components, including services, housing and durable consumer goods, were the main contributors to the formation and growth of total inflation in the third quarter.

In particular, the housing-rental category experienced an expansion in inflation and the corresponding contribution to total inflation. The average inflation of this category reached 5.8% during the third quarter, being about three times the average of the previous 12 months and about 2.5 times higher than the average of the period June 2021-June 2025. The contribution of this category to total inflation increased to 0.8 percentage points, from 0.3 percentage points on average for the previous 12 months.

Gradual increases in inflation were also noted in subgroups of services mainly related to tourism, such as hotels-restaurants-cafes, but also in home maintenance services, education, reflecting the increase in demand and labor costs in other service sectors, etc.

In contrast, external inflationary pressures remain weak, driven by low commodity prices in international markets and the appreciation of the Lek exchange rate. This appears to be the main reason why overall inflation remains below target, despite strengthening domestic price pressures./ Monitor Magazine