Core inflation reaches highest level since 2023

The most stable components of inflation recorded a strong increase in June. According to information from the Bank of Albania, core inflation, net core inflation and inflation excluding food and energy goods increased simultaneously and to a similar extent, indicating that price pressures remain high, even beyond the short-term effect of higher oil prices.

Central Bank figures show that annual core inflation rose to 3.54%, from 3.15% a month earlier.

Core inflation also remains on the rise compared to the same period in 2025, when it was 2.69%. Core inflation has reached its highest level since October 2023.

Core inflation remained above the level of total inflation in the economy this month, which for June, according to INSTAT figures, reached 3.2%.

The sub-basket that measures core inflation is calculated on a group of products and services that constitute 69.8% of the total Consumer Price Index basket.

Core inflation excludes products that are inherently highly volatile, such as food and energy.

The calculation of core inflation has as its main purpose to strip the overall price increase from fluctuations of a shorter-term nature. Core inflation is an important indicator for understanding longer-term price trends and is therefore continuously monitored by the Bank of Albania.

In parallel with core inflation, net core inflation also increased by similar amounts.

For June, this indicator reached 4.03%, up from 3.6% in May and also a significant increase from the level of 2.45% a year earlier.

Net core inflation further excludes processed food subgroups (including bread and cereals) from inflation and is measured over 49% of the CPI basket.

Meanwhile, inflation excluding all food and energy products in June 2026 increased to 3.94%, from 3.54% in May and 2.38% a year earlier.

The above data show that the price increase is not only related to the fluctuation of oil prices, caused mainly by geopolitical tensions in the Middle East. Inflationary pressures in the Albanian economy have a more stable base, which makes an increase in interest rates more likely in the near future.

At this month's Supervisory Council meeting, the Bank of Albania decided to leave the key interest rate unchanged at 2.5%.

According to the Supervisory Council's statement, based on expectations for a normalization of geopolitical tensions and oil prices in international markets, the supply shock in the second quarter is expected to have temporary consequences on the Albanian economy.

However, in the following weeks, tensions in the Middle East have flared up again and, moreover, the inflationary pressures generated by the domestic economy appear to be continuously increasing. /Monitor