Core inflation closed 2025 on the rise. According to information from the Bank of Albania, core inflation reached 3.03% in December, up from 2.5% a year earlier.
Core inflation also marked a slight increase compared to the 2.98% level in November.
Core inflation returned to growth for the first time since 2022, demonstrating rising inflationary pressures from the domestic economy.
The sub-basket that measures core inflation is calculated on a group of products and services that constitute 69.6% of the total Consumer Price Index basket. Core inflation excludes those products that have high volatility, such as food and energy products, and its main purpose is to strip the overall price increase from movements of a shorter-term nature. For this reason, 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 to 3.47% last year, from 2.21% a year earlier.
Net core inflation further excludes processed food subgroups (including bread and cereals) from inflation and is measured at 44.6% of the CPI.
Meanwhile, inflation excluding all food and energy products at the end of 2025 was at 3.32%, up from 2.2% a year earlier.
Official inflation in Albania, measured for the entire basket of consumer goods, closed 2025 at 2.3%, up from 2.1% a year earlier. The more limited increase in inflation is mainly due to the low level of imported inflation. However, in the meantime, longer-term inflationary pressures generated by the domestic economy are significantly higher.
In a statement to "Monitor", the Bank of Albania estimated in December that the main factor behind the increase in core and domestic inflation has been the acceleration of rental prices. Meanwhile, the increase in some of the prices of tourism-related services has been balanced by the decline in the prices of some goods, part of these core and domestic inflation measurements.
Currently, according to the Bank of Albania, rent increases constitute the main source of domestic inflationary pressures, but in the absence of repeated increases in the future, its effect on inflation is expected to be temporary.
The Supervisory Council of the Bank of Albania, at its last meeting of 2025, noted that the overall balance of medium-term pressures is gradually approaching the Bank of Albania's inflation target. Inflation is expected to return to the 3% target during the second quarter of 2026. /Monitor.al/
