Bank of Albania: Prices will increase during the holidays

Albanians will continue to face further price increases in the last months of this year. The Bank of Albania has analyzed the fact that the increase in food prices is estimated to reach a peak at the end of the year and results in an effect of 0.8 percentage points on inflation. In terms of electricity, a price increase for businesses of 10% is assumed.

But the direct effects are calculated zero for citizens, taking into account the fact that there will be no price change for household consumers. The impact on price increases is expected to be transmitted through indirect channels of production costs and services. Thus, the impact on inflation as a result of the assumed increase by 10% of the price of electricity for businesses is projected to be around 0.13 percentage points, influenced by the small weight that electricity occupies in purchases for intermediate consumption.

While the increase in oil prices results in an effect of about 0.5 percentage points on inflation during the last quarter of 2021. The indirect contribution is estimated higher, given the greater weight that oil has in production costs compared to the weight in household consumer spending.

Oil has marked a continuous increase in prices during 2021, reaching about 75 dollars per barrel in September or 82.1% higher than in the same period a year earlier.

In terms of our economy, the effects of oil and food prices are expected to be transient, as direct effects, while indirect impacts, mainly energy, depend on the extent of price increases for large businesses, their areas of activity and the fact how many businesses will translate this increase into final prices. /abcnews.al