Albania Watch: The return of consumer spending

The absence of a second lockdown helped the economy to continue its steady recovery. Hence, retail sales increased by 3.6% yoy in the first quarter of 2021.

Consumer confidence slowly recovering to pre-earthquake levels
Instat, Bank of Albania

Retail sales up versus Q1 2020

The absence of a second lockdown helped the economy to continue its steady recovery. Hence, retail sales increased by 3.6% yoy in the first quarter of 2021, based on data released by INSTAT, which adjusted for seasonality results at -3.4% versus Q4 2020. The contribution to the retails sales figure mainly stems from the increase in Non-food sales (+2.8%) and hydrocarbons sales (+3.2%), and from the decrease in “Food, drinks and tobacco” (-2.4%).

The data was double faced as January 2021 posted a decline versus January 2020, when the country was recovering from the devastating earthquake of December 2019. On the other hand March 2021 posted an increase of 38.6% compared to March 2020 and this was mainly due to the statistics base effects of the previous year’s pandemic lockdown.

The consumer confidence index is only lately showing signs of improvement after the disastrous impact of the double shocks, the earthquake and the pandemic. May 2021 index is now closer to its pre earthquake period, pointing to a solid recovery of retail sales for Q2 2021.

Inflation subdued

The steady increase in retail sales is not reflected in higher inflation figures, in contrast with the substantial increases witnessed in US and Central Europe. In May inflation shifted vaguely, posting a rate of 1.8% yoy compared to 1.9% in April. The main contribution comes from “Transport” (+1.9%), which was boosted by further loosening of the travel restrictions and curfew and the increases in oil prices. Slender increase was also depicted by Clothing and footwear (+0.6%), whereas the groups that suffered the largest decrease are “Food and non-alcoholic beverages” (-0.8%) and “Communication” (-0.8%). Core inflation figure increased to 1.35% in May 2021, only slightly higher than 1.24% in April 2021, suggesting that the accommodative monetary policy will stay in place until the second half of 2022 in our opinion.

Core inflation substantially below BoA's target

Instat, Bank of Albania
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Fjorent RRUSHI

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Fjorent is the head of ALM & Research for Raiffeisen Bank Albania. After a MSc in International Business from the University of Trieste and an MBA from MIB School of Management in Italy he started as an Investor Relations financial analyst at the aerospace & defense company Leonardo in Rome. After that he moved to the Italian Stock Exchange in Milan promoting blue chip companies through roadshows with institutional investors and after the merger with London Stock Exchange was in charge of primary markets of potential to be listed companies in Eastern Europe. In 2011 moved back to his native country to join Raiffeisen Bank in ALM & Research team in charge of fund transfer pricing, liquidity management and IRRBB. After a period at Intesa Sanpaolo Bank Albania as Head of pricing starting from 2021 he is heading the ALM & Research of Raiffeisen Bank Albania. Apart from macroeconomic analysis of particular interest for him is the disruptive technological transformation impacting the banking system. Fjorent’s hobby is football and he enjoys theatre and has been an amateur player as a teenager.