Core inflation started the year with a decline. According to data from the Bank of Albania, core inflation in January decreased to 2.36%, from 2.5% in December 2024.

Core inflation also remains in decline on an annual basis. In January last year, this indicator was at 2.9%.

Core inflation is calculated by the Bank of Albania for a group of goods and services that account for 69% of the weight in the overall basket of the Consumer Price Index.

Core inflation excludes those products that usually have high volatility, mainly food and energy products. The purpose of calculating core inflation is to strip the overall increase in prices from fluctuations of a shorter-term nature. Core inflation is more closely linked to domestic inflationary pressures, which in recent years have been largely driven by rising business labor costs.

In parallel with core inflation, net core inflation for January also fell to 2.1%, from 2.21% in December. Net core inflation is also down year-on-year from 3.28% a year earlier.

Net core inflation further excludes processed food subgroups (including bread and cereals) from inflation and is measured as 44.6% of the CPI.

Meanwhile, inflation excluding all food and energy products for December was at levels similar to net core inflation, at 2.03%, from 2.21% in December.

According to INSTAT, average inflation in the economy closed in 2024 at 2.1%, down significantly from the 4% level at the end of 2023. Meanwhile, overall inflation also fell further in January, to 1.9%.

At its first monetary policy decision-making meeting of the year, the Supervisory Council of the Bank of Albania decided this month to keep the key interest rate unchanged at 2.75%. Governor Gent Sejko said that the current monetary policy stance is still appropriate to guarantee price stability and support sustainable economic development.