Albania’s consumer prices increased by 2.3% y/y in June 2013, speeding up from a 2.1% annual rise in May, the statistics institute, INSTAT, said on its website. The growth was also above the 2.2% y/y rate recorded in June 2012. In monthly terms, consumer prices declined by 0.6% in June, slower than the 1% m/m drop in May.

The overall trend was again determined by food prices, which grew 5.4% y/y, speeding up from 4.9% y/y in May. The growth was mainly driven by a 30.6% rise in vegetable prices and a 10.7% y/y increase in prices of fruit.

Prices of alcoholic beverages and tobacco went up 4.1% y/y in June after advancing 4.3% y/y in the previous month. Communications costs grew by 1.3% y/y advancing at the same pace as in the previous five months.

Costs of education services increased 2.2% on the year. Prices of transport grew by 1% y/y as a result from 1.4% y/y growth in the costs of both equipment operations of personal transportation and transportation services.

By contrast, lower prices of clothing and footwear (down 4.5% y/y) continued to exert downward pressure on the inflation. Regulated prices registered a 0.5% y/y drop in the month as well.

In our estimates, the average inflation rate was equal to 2.4% in January to June 2013, up from 1.5% in the same period of 2012.

The central bank decided at its latest meeting on June 26 to keep the base interest rate at its historic low of 3.75% for a fifth consecutive month after cutting it by 25bps in January. The decision is in line with the objectives to meet the mid-term inflation target, while providing necessary stimulus to support lending growth and consumption.