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IMF: The effects of inflation in Albania, tougher than in the EU, growth is led by food
2023-03-09 08:08:42 / EKONOMI&SOCIALE
The effects of inflation in Albania and the Balkans are harsher than in the European Union, as growth is being led by food prices, unlike Europe which is being influenced by energy.
The International Monetary Fund (IMF) in a study on the effects of inflation in the countries of the Western Balkans shows that the region is facing the highest levels of price growth since the fall of monist regimes in 1990.
In general, the weight of food in the monthly expenses in the Balkans is 42% of the monthly expenses, notes the IMF study. Data from the 6 countries of the Western Balkans (Serbia, Albania, Bosnia, North Macedonia, Montenegro and Kosovo) show that the increase in prices has been stronger for the group of food products, making the increase in prices more severe in a Region where poverty is still at high levels.
The Fund recommends that the specific characteristics of inflation in the economies of the Region deserve further attention. Unlike the EU, food prices have had a relatively larger role, while energy inflation a smaller role in the Western Balkans.
So the high share of food in consumer spending corresponds to a lower level of income. Food prices in the Balkans have increased at higher rates than in the EU for three main reasons according to the IMF:
- First, a higher transmission of food prices from international markets to domestic markets due to the high weight of imports. The main basket food category, such as cereals, vegetable oils suffered an immediate blow from changes in international markets, increasing by 9.4% in the Balkans, while in the EU they increased by only 3.2%.
Secondly, the structural problems of agriculture in the Region become the cause of price disturbances coming from the internal markets. But also the prices from the international markets are transmitted at higher levels than the real changes;
-Thirdly, climatic changes with drought and lack of rain damaged many local products, especially in Bosnia and Serbia.
Thus the weight of energy products in the CPI basket in the Balkans is similar to that of the EU and other European countries, but at the same time, most Western Balkan countries experienced lower energy price inflation compared to the EU because they met most of the consumption needs of the domestic market.
However, the high fuel prices were transmitted to the internal markets of the Balkans and affected higher prices in the transport sector in all countries./Monitor
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