The continuous increase of prices, especially those of food, turns out to be burdening the budget of families in Albania every month and more.
According to the Bank of Albania Consumer Confidence Survey for April, most households stated that their financial situation has deteriorated over the last 12 months.
Families are asked the following question:
How has your family’s financial situation changed over the last 12 months?
It has improved a lot
It’s better
It has not changed
It has gotten worse
It has gotten much worse
I do not know
The balance of responses for April 2022 is almost -17, which shows that 17% more families think that their family situation has deteriorated in the last 12 months, compared to those who say it has improved.
This is the most negative level since April 2020 (-18.4), when the country had just begun to suffer the consequences of the pandemic and quarantine, which suddenly closed many businesses and left many unemployed. Subsequently, the situation began to gradually improve, reaching a balance of -7 in September 2021.
But the start of rising prices seems to have worsened the budgets of households, which with the same amount of money are buying less and less products.
In April, inflation, which measures the change in the prices of a particular basket of goods, jumped to 6.2% in April, compared to the same month a year earlier. This is another new record, after the level of March, which reached 5.7%.
This is the strongest price increase that households and individuals have been facing since 2001, when inflation was 7.6%.
This increase seems to have hit low-income families hardest. Expenditures of Albanian households to buy basic basket products, such as bread, oil, dairy and sugar, increased at double-digit rates in April from 14 to 24 percent, putting high pressure especially on the budgets of poor households. Poor households in Albania spend almost 60 percent of their monthly food budget, so raising prices is more likely to worsen their survival. Albania has about 640 thousand people living in poverty, with less than 5.4USD per day, ranking our country with the highest level of poverty in the region, although with a decrease yesterday from 2020.
In contrast, for high-income families, the situation seems to improve. The Bank of Albania survey showed a slight improvement in expectations for large car purchases, home purchases, or home renovations.
Nevertheless, despite the improvement, the balance of answers to questions related to large purchases remains extremely negative. For home purchases, in the last quarter 2021 the balance was -87.1 (from -88.86 in the previous quarter), indicating that 87% more households do not have the opportunity to buy or build a home, compared to those who have.
Pessimism about financial expectations for the next 12 months has somewhat decreased in the April survey, although the balance remains among the most negative levels since this index was compiled.
For April, the balance of responses was -7.9, from -11.8 which was in March, the historic negative level since May 2016.
