Albania’s consumer price index (CPI) inflation soared to 5.7% in March as the impact of the war in Ukraine was felt in a sharp rise in prices.

Albania had already experienced sharp price increases in the fall of 2021, as energy and food prices rose in international markets. The war caused a sudden acceleration of inflation, especially for energy and fuel prices, both imported by Albania.

The largest impact on annual consumer price inflation came from the food and non-alcoholic beverages category, which accounts for a substantial share of Albanians’ consumption baskets, and contributed 3.31 points percentage (pp) to the overall increase.

Another main contributor was transport, which added 1.08 pp, followed by housing, water, electricity and other fuels (0.44 pp), alcoholic beverages and tobacco (0 .24 pp) and hotels, cafes and restaurants (0.19 pp).

Compared to March 2021, the largest price increase was recorded for transport, where prices increased by 19.9%, followed by food and non-alcoholic beverages (9.3%), alcoholic beverages and tobacco (4.9%) and hotels, cafes and restaurants (4.5%). %).

In the food category, prices rose the fastest for oils and fats, climbing 22.4% year-on-year; there have been sharp increases in sunflower oil prices, as Russia and Ukraine are major producers and shortages are feared, prompting some governments in the region to restrict exports.

There was also a 15.8% year-on-year increase in bread and cereal prices; again, Russia and Ukraine are major grain producers and exporters, and war and sanctions are expected to limit supplies to the rest of the world.

Other food products whose prices have soared include vegetables by 10.5%, dairy products by 10.3%, sugar, jam, honey, syrup, chocolates and confectionery by 10.2 % and meat 7.1%.

On a monthly basis, consumer prices increased by 2.4%, with the fastest increases being transport (+8.9% m/m), food and non-alcoholic beverages (+3.9% ) and alcoholic beverages and tobacco (+2.8%).

The Bank of Albania raised the base interest rate to 1.0% on March 23, citing rising inflation following the Russian invasion of Ukraine. Rising food and fuel prices sparked protests in Albania in the fall, and they escalated in March.

Albania’s central bank expects prices to remain high at least until the end of 2022, Bank of Albania Governor Gent Sejko said on April 5, according to a statement from the bank. central.

“[I]n our horizon as policy makers – also in the everyday economic life of every business and every household – a new challenge has arisen. Russia’s military attack on Ukraine and the sanctions implemented have led to a sharp increase in the prices of food, oil, energy products and raw materials on international markets,” Sejko said.

“Amid considerable uncertainty, available information suggests that prices will continue to remain elevated, at least, even into the remainder of 2022,” he added.