How Albania became the country with the highest cost of living in the Balkans within a decade

In 2013, Albania was the second-lowest cost of living in Europe. According to Eurostat, when Edi Rama took office as prime minister, the cost of living in Albania was 49.6 percent of the European Union average, ranking only behind Macedonia, where the overall price level was 48.9 percent of the EU average.

All other countries in the region and those of the European Union had a higher price level, ranging from 50.8 percent to 142.2 percent of the EU average.

But the affordable cost of living in Albania would increase rapidly in the following years, as prices would rise at a rapid pace for all categories of goods and services.

In 2017, after a full mandate of the joint government between the Socialist Party and the former Socialist Movement for Integration, ironically referred to by the opposition as the Alliance of Stinks, the cost of living in Albania increased by 2.8 percentage points, reaching 52.4 percent of the European Union average.

Once again, the country continued to remain among the three freest in Europe, but the first mandate of the Socialists was only the prologue of what was to come.

In the first two years of Edi Rama's second term, now with the wheel and the pan all in his own hands, the cost of living in the country increased at an explosive pace, almost 6 full percentage points compared to the EU average, reaching 58.3 percent of the Union average.

Albania had now officially become the country with the most expensive cost of living, not only in the 6 Western Balkan countries, but had also left behind two European Union countries, namely Bulgaria and Romania, where the average cost of living was 53.6 and 55.5 of the EU average, respectively.

In the last year of the EU presidency, 2021, the overall cost of living in Albania reached 61.6 percent of the EU average. Albania had already surpassed Poland in terms of price levels, a country not only an EU member but also considered one of the new economic superpowers of the Union.

However, the more the worse. A third term would be even more fatal in terms of increasing the cost of living for Albanian citizens.

At the end of last year, the overall price level in Albania was 72.6 percent of the EU average. So in the last 4 years, the cost of living in Albania increased by an explosive 11 percentage points compared to the European Union average, while compared to 2013 it has increased by a full 23 percentage points.

In North Macedonia and Bosnia, the price level remained below 60 percent of the EU average, while in Serbia and Montenegro the indicator was below 68 percent.

Food and technology are emptying Albanians' pockets

In recent years, in addition to the average cost of living in EU countries and those in the accession process, Eurostat also began publishing detailed price data by group of goods and services.

These data show that above all, there are two categories of expenses that are taking the breath away from Albanian citizens. They are the prices of vital products, namely the group of food and non-alcoholic beverages, and the expenses that Albanians make on information and communication technology.

According to Eurostat, food prices in Albania are higher than the European Union average, namely 103.8 percent of the Union average. The data shows that food prices in Albania are more expensive than in Germany, the Netherlands, Italy, Portugal and many other countries that are several times richer than Albania.

This indicator is the one with the highest weight in the overall cost of living in Albania and the factor that most determines why Albania is now the most expensive country among similar economies.

The unstoppable increase in the price of basic basket products, both in absolute terms and in terms relative to the European Union, comes at a time when the market is largely dominated by imported products and when the euro has depreciated by almost 33 percent against the lek, which should normally have reduced food prices in Albania, as these goods are mainly purchased in euros and sold in lek.

But the entire depreciation of the euro has apparently been captured entirely by merchants' profits, with no effect on price reductions for citizens.

Meanwhile, the second group of products with unaffordable prices is that of technology and communication. This includes the prices of computers, servers, telephones, that is, all communication and information technology products. In this category, Albania has prices that are 107 percent of the European Union average, leaving behind countries like France, Italy and Spain.

But while price increases are rapidly converging towards European Union levels, Albanians' incomes have grown much more slowly.

According to Eurostat, for the period 2013-2025, the cost of living in Albania increased by a full 23 percentage points compared to the European Union average. For the same period, income or GDP per capita according to purchasing power increased by only 13 percentage points, from 30 percent of the EU average in 2013, to 43 percent at the end of last year.

When prices rise more than incomes, the result is impoverishment of consumers and families. This is what has happened to Albanians over the last 12 years.  /Kapitali.al