Albanias consumer prices grew by 2.4% y/y in December 2012, easing from a 2.5% annual rise in the previous month, the statistics institute, INSTAT, said on its website. The growth, however, was over the 1.7% y/y rate recorded in Dec 2011. In monthly terms, consumer prices increased by 0.9% in December, speeding up from 0.2% m/m growth in November. Food prices increased by an annual 3.6%, mainly driven by a 11.2% growth in fruits as well as a 9% y/y increase in costs of vegetables. Prices of alcoholic beverages and tobacco increased by 3.8% y/y in December, slower than November's rise of 4% y/y. The cost of transport services rose by 3.4% y/y, driven up by a 3.8% y/y increase in prices of personal transportation equipment, a 3.1% y/y rise in transportation services and a 3.8% y/y growth in vehicle prices. Communication services costs increased by 1.3% y/y in December, reversing from annual declines in the previous two months. The costs of goods and different services advanced by 5.7% y/y in December, decelerating from a 10.6% y/y rise a month ago. Lower prices of clothing and footwear continued to exert downward pressure on inflation in the country. In our estimates, the average inflation rate equals to 2% in 2012, down from 3.5% in 2011. The central bank decided at its latest meeting on December 20 to keep the base interest rate unchanged at the historic low of 4% for the fifth straight month after cutting it by 25bps in July. The bank has earlier lowered its annual inflation target, projecting a 0.7%-2.8% fluctuating band.
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