Bank of Albania: Family financial situation, worst since the pandemic

According to a survey of the Bank of Albania's Confidence Consumers for April, most families have claimed their financial situation has deteriorated over the past 12 months.

Families are asked the following question:

How has your family's financial situation changed over the past 12 months?

It's improved.
It's improved.
Has Not Changed
It's getting worse.
It's getting worse.
I don't know.

The balance of answers for April 2022 shows that 17% more families think their family situation has deteriorated over the past 12 months, in relation 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 pandemic and quarantine deployment, which suddenly closed many businesses and left many unemployed. Then the situation gradually began to improve, reaching a balance of -7 in September 2021.

But the start of price hikes seems to have worsened family budgets, with the same amount of money buying less and less products.

In April, inflation, measuring the change in prices of a given cargo basket, jumped to 6.2% in April compared to the same month a year ago. This is another new record, after the March level, which reached 5.7%.

This is the strongest price hike families and individuals have been facing since 2001, when inflation was 7.6%.

Such expensiveness seems to have hit families with lower incomes. Albanian families' expenses on purchase of basic basket products, such as bread, oil, dairy, and sugar, have increased at a double rate in April from 14 to 24 percent, particularly putting high pressure on poor families' budgets. Poor families in Albania account for nearly 60 percent of the monthly food consumption budget, so their expensiveness will most likely make their survival worse. Albania has about 640,000 people living in poverty, with less than 5. 4 U n SDS a day, ranking our country at the highest level with the largest poverty rate in Rion, though yesterday's decline since 2020.

By contrast, for families with high incomes, the situation seems to be improving. The survey of the Bank of Albania resulted in a slight improvement in expectations for large car purchases, home purchases, or home renovation.

Despite improvement, however, the balance of answers to the questions related to large purchases remains too negative. For household purchase, in the last quarter of 2021 the balance was -87.1 (from -88.86) in the previous quarter), showing that 87% more families cannot afford to buy or build a house compared with those they have.

Pessimism for financial expectations for the next 12 months has decreased somewhat in the April survey, although balance remains among the most negative levels in which this index is drafted.

For April, the balance of answers was -7.9, from -11.8 in March, the historic negative level since May 2016. /Monitor/