Protests in Albania as rising food and fuel prices bite

Protests in Albania as rising food and fuel prices bite
Motorists in Albania face rising fuel costs.
By bne IntelliNews October 8, 2021

Protests took place in the Albanian cities of Shkoder and Tirana this week after a warning from Prime Minister Edi Rama about an impending energy crisis this winter sparked a political backlash. 

Politicians in other parts of the Western Balkans, a group of countries which comprises some of the poorest countries in Europe, are also looking at ways to ease the burden of inflation, in particular soaring energy costs, on their populations. 

In Tirana, several thousand people protested outside the prime minister’s office on October 6 against the higher prices of energy and fuel, and staple foods such as flour, bread and coffee. 

“Bread costs more than hashish” and “Down with dictatorship” read some of the placards, as reported by Albanian Daily News. 

Reportedly, one Democratic Party supporter at the protest was asked to take down his party flag to keep the protest non-political.

The main demands from protesters were for VAT to be abolished on food in the basic consumer basket, and reductions in taxes for energy and oil. Protesters said that if their demands aren’t met they will take to the streets again on Monday October 11. 

The Tirana protest followed another in the northern city of Shkoder attended by a mix of pensioners, students, small home-owners and others earlier in the week.  

They were organised over social media after Rama warned on October 3 that energy prices will continue to rise for Albanians well into 2022. 

As outlined by Rama at a press conference, Albania, like other countries, is experiencing sharp increases in energy prices as the global economy recovers from the coronavirus (COVID-19) pandemic, and demand for electricity and oil increases. 

Rama called the situation a “natural misfortune”, likening it to the earthquake of November 2019 and the pandemic itself.

“The high rate of recovery after the pandemic and the amplified need for energy have led to results like the rise in the price of gas by around 250%, the rise in fuel prices, from $60 a barrel in August to $80 now and according to projections, the price is expected to reach $100 per barrel by the end of this year,” the prime minister said. 

“For Albania, the average annual price for buying energy from imports has almost tripled compared to last year,” he added. 

Rama cited experts as saying that the situation is likely to continue through to the first half of 2022, and said his administration will do whatever is needed to minimise the effects of this crisis.

However, opposition leader Lulzim Basha responded, calling the energy crisis a “disaster prepared by the government”. He told journalists on October 4 that corruption, not developments on global markets, was the cause of the shortages. 

Basha said his Democratic Party will endorse all forms of civil resistance, and will make direct contact with citizens to organise resistance efforts.

“[T]he price of energy and the price of fuel burdens mostly households and businesses, in particular small and medium business, but also large manufacturing business,” Basha said on October 4, according to a Democratic Party statement. 

“We all know that increases in the price of energy and fuel have a direct effect on the price of everything else we consume, from the bread we eat to the services that citizens receive. I want to remind you here that Edi Rama promised to reduce the price of energy, when in fact he increased it for both families and businesses.”

Albania’s annual inflation has accelerated for the last couple of months, in line with the general trend across emerging Europe as the post-coronacrisis recovery gets underway. The consumer price index (CPI) showed year-on-year growth of 2.4% in August, up from a low of just 0.4% in January.

The problem is a global one. As noted in an International Monetary Fund (IMF) blog: “The economic recovery has fuelled a rapid acceleration in inflation this year for advanced and emerging market economies, driven by firming demand, supply shortages and rapidly rising commodity prices." 

The fund noted large price movements in some sectors, notably food, transportation, clothing and communications, and it expects several more months of higher inflation, especially in emerging economies, before it returns to pre-pandemic levels by mid-2022. 

“Food prices around the world jumped by about 40% during the pandemic, an especially acute challenge for low-income countries where such purchases make up a big share of consumer spending,” added the IMF blog.

The Western Balkans remains one of the poorest areas of Europe. As a recent report from the Vienna Institute for International Economic Studies (wiiw) and Bertelsmann Stiftung shows, economic convergence with Germany over the past 20 years has been very slow, while the gap with the new EU members in Eastern Europe has widened. 

Food and non-alcoholic beverages accounted for the largest share of Albanians’ average monthly expenditure at ALL34,713, or 41.6% of the overall household budget, according to recent data from the state statistics office, Instat. 

The average monthly consumption expenditures of an Albanian household stood at ALL83,475 (€675) in 2020, with the average household numbering 3.6 people. 

While Albania is so far the only Southeast European country to have erupted into protests, others are struggling with the same price increases, and warn of more to come. 

In North Macedonia, manufacturers said that a dramatic increase in food prices, in some sectors by as much as 40-50%, is expected, as farmers' basic production costs have risen by 70-80%. Direct costs in the dairy industry have surged by 11%, Nezavisen reported on October 5.

This was announced at a news conference at the Chamber of Commerce, where businesses called for the launch of a campaign to encourage people to buy domestic products.

PM Zoran Zaev said that it is “an exaggeration” to say that prices will increase by 50%, as inflation is controlled at the level of up to 2.7%.

“It can be a problem if inflation exceeds 10%. As an open market and dependent on European market, we cannot be isolated from the world. The price of electricity is also a major indicator of rising prices,” Zaev said.

In Bosnia, pensioners in the Bosnian Federation have threatened to protest unless pensions are raised, reported the Sarajevo Times in late September. They cited the increase in the price of essential foodstuffs. 60% of pensioners in the Federation get a minimum pension of BAM380 a month. 

In Serbia, the government has been trying to reassure the population over rising energy costs, and Serbian President Aleksandar Vucic said he will ask his Russian counterpart Vladimir Putin to help Serbia through the energy crisis. 

Both parliamentary and presidential elections are approaching in Serbia in spring 2022, meaning Vucic’s ruling Serbian Progressive Party (SNS) is under pressure to reassure the population and stop rising costs from leading to a fall in living standards. The government plans to make a one-off payment of €20 to all adult citizens of Serbia in December.