Core inflation reaches lowest point in Albania since 2021
The downward trend of core inflation in Albania continues, reaching its lowest point for the past three years. It is currently closely aligns with headline consumer price inflation, which stood at 2.2% in May according to the Albanian Institute of Statistics.
Why is this relevant
The decline in core inflation is seen as a crucial indicator for future monetary policy decisions. If this downward trend is sustained, a more accommodative monetary policy position may soon be considered by the Bank of Albania, potentially leading to lower interest rates. Albania’s current interest rate stands at 3.25%, one of the lowest in Europe.
According to the Bank of Albania, base inflation decreased to 2.33% in May from 3.2% at the end of last year and from 5.41% from the same period a year ago.
Core inflation is calculated by the Bank of Albania for a group of goods that represent 69% of the total weight in the Consumer Price Index basket. Items such as food and energy products, which are typically volatile, are excluded. The objective of calculating core inflation is to smooth out short-term fluctuations in prices.
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