Albania's consumer price inflation in January accelerated modestly to 2.7% year-on-year (y/y), from 2.4% y/y in December 2012 and 1.6% y/y in January 2011. The main driver of annual inflation was the 4.4% y/y increase in food prices.

IHS Global Insight says: "Albania managed to meet the central bank's inflation target of 2.04.0% for the 10th consecutive year in 2012, allowing the Bank of Albania to loosen the benchmark interest rate to 3.75% in late January. In our February detailed forecast, we cut our projection of average annual inflation to 2.1% in 2013, up only slightly from last year's average of 2.0%. While global food costs will remain elevated in the coming months, overall inflation will benefit from weak domestic demand. Still, the recent loosening of monetary policy could drive a faster-than-expected revival of economic activity, which will also benefit from increased government spending ahead of the parliamentary election in June 2013. Thus, inflation risks will remain elevated in 2013, particularly if the leu falls back significantly against the euro."

Source: bne