Price growth slowed in September, dropping to 2.9% from 3.2% in August, influenced by a decline in the prices of clothing and communication services.

According to INSTAT, the annual price increase in September was driven primarily by the "Food and non-alcoholic beverages" group, contributing +0.96 percentage points, followed by the "Transport" group with +0.81 percentage points.

Additionally, prices in the “Rent, water, electricity, gas, and other fuels” group contributed +0.54 percentage points; the “Furniture, household appliances, and home maintenance” group contributed +0.16 percentage points; the “Alcoholic beverages and tobacco,” “Recreation, sport, and culture,” and “Restaurants and accommodation services” groups each contributed +0.12 percentage points; the “Personal care and miscellaneous goods and services” group contributed +0.08 percentage points; the “Insurance and financial services” group contributed +0.07 percentage points; the “Health” group contributed +0.06 percentage points; and the “Education services” group contributed +0.04 percentage points.

Conversely, prices in the “Clothing and footwear” group contributed -0.12 percentage points, and prices in the “Information and communication” group contributed -0.04 percentage points.

However, the central bank - whose primary objective is maintaining price stability, managed through the key interest rate - kept the key rate unchanged at 2.5% during its most recent meeting on Wednesday. However, the bank warned that it is likely to raise rates in the future.

“The rise in inflation during July and August was somewhat faster than we had anticipated. Regarding the composition of the consumer basket, the increase in inflation was driven by rising fuel and unprocessed food prices. Conversely, inflation for services and rents declined. From a macroeconomic perspective, inflation trends reflected mounting external pressures. In particular, the rapid rise in global commodity prices and increasing inflation among our trading partners were not fully offset by the dampening effect of a strengthening exchange rate, resulting in higher imported inflation. On the other hand, core and domestic inflation declined - a trend driven primarily by lower rent inflation, reflecting a better balance between supply and demand in the long-term rental market,” said Bank of Albania Governor Gent Sejko.