Inflation, above the Bank of Albania's target, reached 3.2% in June, driven by food and rents
Inflation in Albania rose above the Bank of Albania's target in June, reopening attention to price developments and the scope for monetary policy in the coming months.
According to INSTAT data, the annual inflation rate, measured through the Consumer Price Index, reached 3.2% in June 2026, up from 2.4% in the same month a year earlier. Compared to May, consumer prices marked a slight decrease of 0.1%, but on an annual basis inflation has already exceeded the 3% level, which is the medium-term objective of the Bank of Albania. This is the highest level since the beginning of 2024.
The main pressure came from two basic items of the consumer basket, namely food and rent. The group “Food and non-alcoholic beverages” had the greatest impact on the annual price increase, with +1.02 percentage points, while the group “Rent, water, electricity, gas and other fuels” contributed with +0.96 percentage points.
This means that more than half of June's inflation was driven by everyday products and housing costs, two categories that directly affect household budgets. Transportation also made a positive contribution to inflation, with +0.21 percentage points, while restaurants, accommodation services and household appliances contributed with +0.19 percentage points each.
On the other hand, the only category that slightly reduced inflation was the “Clothing and footwear” group, with an impact of -0.03 percentage points. In annual terms, prices in this group fell by 0.9%.
The strongest annual price increase was recorded in “Entertainment, sports and culture”, at 6.1%, followed by “Insurance and financial services” at 5.1% and “Rent, water, electricity, gas and other fuels” at 4.8%. Food, although not having the highest percentage increase, weighs more in the consumer basket and therefore had the greatest impact on overall inflation.
The June performance comes at a time when the Bank of Albania's base interest rate stands at 2.5%, following the cut made in July 2025. This means that current inflation is now higher not only than the 3% target, but also than the base interest rate, a development that places monetary policy in the face of a more delicate balance between supporting the economy and controlling prices.
On a monthly basis, prices fell slightly, mainly due to transportation, which fell by 4.0% compared to May. However, this decline was not enough to alleviate the annual pressure, as the costs of food, rent and services continue to keep inflation above the central bank's target level.
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