Page 60 - bne IntelliNews Southeastern Europe Outlook 2025

Europe’s largest economy, marking a 3% decrease compared to the previous year.
4.0 Inflation & Monetary Policy
4.1 Inflation & Monetary Policy – Albania
Albania’s annual consumer price inflation fell to 1.9% in October 2024, a significant decline from 3.8% in the same month the previous year, according to the national statistics office, INSTAT. On a monthly basis, the consumer price index (CPI) edged up by 0.1% compared to September.
For the third quarter of 2024, inflation averaged 2%, influenced by reduced oil prices and a slower increase in rental costs, although food prices saw a modest rise.
The Harmonised Index of Consumer Prices (HICP), an alternative measure of inflation, also had a moderate rate of 2.3% in October.
The central bank projects inflation to stabilise at its 3% target by 2025. Reflecting confidence in the country’s economic trajectory, the Bank of Albania reduced its benchmark interest rate in November, lowering it by 0.25 percentage points to 2.75%. This decision was attributed to Albania’s stable economic growth and contained inflation levels.
Central Bank Governor Gent Sejko highlighted the broader context of these changes, noting that monetary policy adjustments have played a critical role in managing inflation following the international market shocks of 2022. "The gradual and prudential normalisation of the monetary policy stance enabled the control and reduction of inflation," Sejko said at a press conference on November 6.
Inflationary pressures have eased primarily due to external factors such as reduced inflation in trading partner countries, lower global oil and food prices, and the appreciation of the Albanian lek. Sejko explained that domestic inflationary pressures, though declining, remain influenced by strong wage growth and high consumer demand, which sustain business profit margins and contribute to price increases.
Looking ahead, Sejko affirmed confidence in Albania’s economic outlook. “Overall, we expect economic growth to continue on the positive track and inflation to return gradually to the target in the next year. Nevertheless, this updating suggests the balance of risks on inflation are on the downside in the medium term.”
However, risks persist, including exchange rate fluctuations, labour shortages driven by emigration, and other potential inflationary pressures.
60 SE Outlook 2025 www.intellinews.com