Average inflation in Albania

Average annual inflation measures the mean rise in Albanian consumer prices over a year, calculated as the average of the twelve monthly inflation rates. It condenses the year's inflationary pressure into a single figure.

It builds on the consumer price index (CPI) compiled by Albania's Institute of Statistics (INSTAT) from a regular price survey. The annual average compares the year's mean index with the previous year's, unlike end-of-period year-on-year inflation; long-run series usually come from the IMF.

Inflation erodes Albanian households' purchasing power and is the Bank of Albania's central reference when setting interest rates. The annual average is useful for comparing full years, but it responds with a lag to recent turns in prices.

Being a yearly average, it smooths peaks and troughs and lags behind end-of-period year-on-year inflation. It only captures the prices in the defined basket, and for the underlying trend it is worth watching core inflation, which strips out energy and unprocessed food.