Inflation in May in Albania reached a historical high of 6.7% while the rate for food items reached double figures as prices continue to rise, spelling trouble for Albanian households who are still reeling from the fallout of the COVID-19 pandemic.
Prices have been rising for some time but have been further exacerbated by Russia’s invasion of Ukraine which has increased the cost of fuel, energy, foodstuffs and fertilisers. As fuel prices also reached an all-time high of 258 Lek (EUR 2.15) a litre, items such as bread, cooking oil, and dairy have also gone up.
According to official data from INSTAT, basket products increased in price at double digit rates during May, compared to an increase of just 1.8% the previous year.
During May, the cost of transport including fuel, public and private transport increased by 21.7% followed by food and non-alcoholic beverages with 11.4%. Hotels, cafes and restaurants put prices up by 5.3%, while alcohol and cigarettes went up by 5%.
Within the food sector, cooking oils and fats increased by almost 30% in just one month, followed by bread and cereals at 18.6%, dairy by 18.4%, sweets by 15%, vegetables by 13% and meat by 7.8%. This is due to increased production and transport costs and the looming global hunger crisis.
As one of Europe’s poorest countries, Albanians are buckling under the weight of increased prices. With one third previously living below the poverty line, thousands more risk crossing the boundary and struggling to buy essential items.
A recent report from the World Bank found that Albania was the second-worst in the region when it comes to government support for citizens when dealing with the pandemic and the current crisis. Just 0.3% of the GDP is used to support citizens through social benefits, crisis packages, and direct subsidies. Serbia was the region’s leader with 2%.
This is even though, from January-April 2022, state coffers increased in value by around EUR 300 million compared to last year as a result of taxes rising due to higher prices.
Even the Bank of Albania has urged more investments toward social aid. Governor Gent Sejko said it is necessary to support the vulnerable while scaling back on non-priority expenditures.
He called for fiscal policies to support those individuals and businesses most impacted by inflation, adding it should be financed by additional income from price creases.
“By doing so, the intervention will be effective but will not harm public debt indicators,” he said.