PRESS RELEASE
The Concluding Meeting on the Bank of Albania Campaign against the speculative increase of prices at year-end holidays

The Bank of Albania held today the concluding meeting on the Campaign against the speculative increase of prices on the eve of year-end holidays. The meeting, chaired by the Governor of the Bank of Albania, Mr. Shkëlqim Cani, was organized in the form of a round table with representatives from INSTAT, the Ministry of Finances and the Ministry of Economy, public institutions and representatives of the civil society, closely related to the protection of consumers and citizens interests, journalists of the written and electronic media, etc.

The Governor presented briefly the arguments on which the campaign was set up and developed, accompanying debates, the general support offered by the media, the results with regard to public awareness and conclusions through the figures of consumption price index development, in December 2003.

According to Mr. Cani, "inflation is the main objective for the Bank of Albania as it generally is for modern central banks. In shooting the inflation target, the Bank of Albania makes use of all means at its disposal, from the classical and usual ones, like the monetary policy decisions and instruments, to the interim ones having a rapid impact, easily understood by the public. Such is the case of the campaign against the speculative increase of prices on the eve of year-end holidays.

The aim of the campaign, the second one in succession undertaken on the eve of year-end holidays, was to make consumers, business and the state authorities aware that the increase of prices was a speculative one, and everyone could have played its role so that Albanians, too could celebrate as the rest of the world with normal prices. The Bank of Albania's concern was related to the artificial inflation "jump" in December, and conveying this concern to the public was an important fact during the campaign.

The state authorities played also an important role in the campaign. Contrary to the support given by the customs, which did not change the reference prices, the presence of taxation authorities could be regarded as anemic, particularly in respect of monitoring markets, at least in calculating the fiscal obligations of traders or in giving the psychological effect of their presence in the market.

The Bank of Albania deems the campaign successful if considering two main arguments: the public and media reaction, which implies that awareness effects and references of developments figures in December 2003 were achieved, contrary to the same periods in the previous years.

The Bank of Albania campaign and declarations made by its administrators during those days focused on a positive inflation rate, within the targeted interval of 2 - 4 percent. However, the Bank of Albania had to wait for the results of the Consumption Price Index, where the annual difference for December implies the annual inflation. This index is published by INSTAT, and the annual difference in December resulted to be 3.3 percent, that is within the targeted interval of the Bank of Albania.

The campaign was successful, firstly because the Bank of Albania achieved for the fifth year in succession, its objective of having an inflation rate within the forecasted and announced interval at the beginning of the year.

On the other hand, referring to the INSTAT report, "surprise" developments were registered in the indicator of Consumption Price Index, when the Alb telecom company decided to increase the telephony prices by 68.8 percent. This gave its impact by 0.7 percent in the monthly increase of consumption prices. This is not part of the campaign arguments of the Bank, and consequently it should be deduced.

The campaign was also successful because the foodstuff group prices increased only by 0.9 percentage points, compared to 2.1 percentage points it was in 2002 and about 3 percentage points in 2001. The prices of the "fruits and vegetables" group, referred to as a problematic one, have been going downward; this implies another argument in favor of the campaign.

Though it is still early, the general opinion at the Bank of Albania does not see as necessary another campaign by the end of 2004. However, it will be the price performance throughout 2004 that will give us a clear indication whether to engage in another campaign or not, and on the other hand, the campaign is an initiative which can be undertaken by any financial subject.

The conclusions of the campaign drawn from the Bank of Albania are as follows:

1. Although there are no sufficient data to estimate the supply of foodstuff products, the conclusion that can be drawn is that the increased demand faces the increased supply, eliminating thus a logical cause, which could have led to an out-of-control increase of prices. Therefore, we admit that there have been again speculative increases of foodstuff prices by the end of 2003.
2. According to the survey carried out by the Bank of Albania, it clearly resulted that 92 percent of the population expected the increase of prices during December. Thus, the Albanian consumer, because it manifests such expectations, becomes a factor that stimulates speculations in the market.
3. The speculating phenomenon can be found in all the trading links of foodstuff products. The wholesale link serves as the start in this process, reinforced then in the other links as to their power in determining prices.
4. This campaign identified once more the need for close cooperation among institutions. Though the promise of prior Minister of Finances, that there shall not be changes in fees and there shall not be fiscal pressure on taxation authorities, became a reality, the taxation authorities were expected to be more active.
5. On the other hand the development of markets and competition should be anticipated. Perhaps, it is the Municipalities that should cooperate with agro-business associations and traders of fruits and vegetables.
6. Referring to the "Avni Rustemi" market as an expensive one bears negative effects. From our observations, this market is frequented mainly by well-off people and foreigners. Referring continuously to prices in this market takes one away from the truth and creates a psychological effect on the consumers and traders the like.
7. In the short-term plan, the campaign helped smoothing the negative impacts of this phenomenon on the monthly inflation rate during December 2003. This year's inflation, contrasted to the last four Decembers, was low.
8. Finally, the campaign is assessed as positive, especially towards public awareness. The place it occupied in the written and visual media, the reaction of many intellectuals, the figures published by INSTAT and the ones from the Bank of Albania observation leave no doubt in this respect.