Author: Denis Tahiri
With hands shaking from age, she puts the products she just bought into the bag. In total, a package of eggs, a package of flour, a bottle of oil, yogurt and bread. He adjusts the white scarf that covers his gray hair and takes the food. She takes off and complains as soon as he asks her about the prices.
" It's crazy, 8 eggs cost 300 lek. But eggs go into everything to cook. As much as I got, 15000 thousand lek went to me, 120 thousand lek is my mother's pension," she says, adding that a difficult winter awaits her. " My mother is the second, I also have an old man, he has a 200 thousand lek pension. Now tell me, with 320 thousand lek, can two old men in Tirana, both with a handful of medicines, manage?", a nod of the head was enough and she continued talking again. " I thank God for giving me three sons, they never let us be sad, I am far away and I rarely see them, but they don't let us lack anything," Asija tells "Sinjalizo".
The pensioner represents the portrait of the third age struggling with salty prices and low pensions. Young people do not make a difference, however. The couple Elsa and Arbeni (names changed due to the job position they hold), a young couple, both in their 30s, are employed in the state administration.
The payment that gives them a headache is the rent for which they pay 50 lek every month. Then there are also the electricity and telephone bills, which are a salary. The other is used for food.
" Everything has become more expensive, going to the supermarket, 300 thousand lek is not enough to buy the necessary things for good nutrition so that you don't have problems later," says Elsa.
And when you ask them about the salary increase that the government made a few days ago, their ironic smile is not missing. " It wasn't a salary increase, it was just the indexation of the salary due to inflation that hadn't been done for years and the state is obliged to do it every year," explains the head of the family.
The rise of junk food hits families
In the first months of 2022, price increases were felt by most Albanian consumers. The first days of March 2022 saw flour in Albania increase by 36%. According to Open Data Albania , the groups of goods and Services that have experienced the most growth this year are Services to personal means of transport 26.7%, oils and fats 22.4%, bread and cereals 15.8%, vegetables including potatoes 10.5%, milk, cheese and eggs 10.3% and sugar, jam, honey, chocolate, and sweets 10.2%. Meanwhile, the price that jumped within the day was that for buying an egg, which until January 2022 cost 17 lek. It is currently 30 lek for one grain.
In Albania, they forgot to review salaries
The increase in the price of gasoline, as well as oil and gas, increased the economic burden of a citizen even more. Various measures were taken by the governments of neighboring countries, where the one that stood out was North Macedonia, which immediately approved the law on reducing the excise duty on fuels that the state received from their sale, as well as the law on reducing the Value Added Tax for fuels from 18% to 10%, while removing VAT on all basic foods. The removal of this VAT is almost a unique case in the region. A similar thing was requested in Albania a few weeks ago, where opposition MPs, due to the price increase, requested the reduction of VAT from 20% to 6%, but such a thing has not found the support of the government.
On the other hand, Hasan Stafa, from the consumer office, says that the most numerous complaints are mainly for basic products. " In September alone, over 2134 complaints were registered for speculative price increases," says Mr. Stafa, who adds that the price increase is continuous. " The second price increase began on June 14 after the tourist season began, the food basket increased without declaring by 17-45% over the increase at the end of February," he says, adding that the increase continues every week by 10-20 lek.
And if you ask him where this price increase came from, Mr. Stafa will tell you that the increase began for every food product on February 27, dictated by the change in prices in the European market and beyond. " The official reason remains the invasion of Ukraine, this aggression raised within 7 days the price of fuel by 46%, flour by 37%, oil by 45-80%, bread by 32%, basket foods by 22-43%, animal foods by 30-54% and transportation in general by 30%", he says. Regarding the measures of the social package undertaken, Mr. Stafa says that the compensation covers about 3-4% of the speculative price increase. " The Transparency Board is formal, not operational, no one knows who it consists of and is headed by and has no influence on the market", he concludes.
Expert: Late and little measures
Genti Beqiri, economist and currently Director of the Japanese Chamber of Commerce, in an interview for "Sinjalizo" says that the measures taken by the government were delayed and normally the percentage of impact is not 1 to 1, at the level that it is with the increase in prices or living costs.
And while in EU countries, inflation indexation occurs every year at the end of the salary, in Albania this rarely happens. And even when it happens, it is sold as a salary increase, not inflation indexation.
"As long as the system does not work to index at the end of the year, that is, how much inflation has increased, to increase salaries and pensions, we must be clear that this has not happened with the same percentage that prices or individual living costs have increased, the level of pensions, social assistance, etc. has also increased," says Mr. Beqiri, adding that Albania is behind the entire Balkans. " Kosovo has them at a higher level for 1000 reasons, it is not important to say," he says, adding that the income in the state budget has increased due to additional income from VAT, which is higher, due to the increase in prices, but the redistribution of these additional incomes to the population leaves out a part of it. Those who do not work in the administration.
" So an individual who works in the private sector contributes to the increase in state income, since this increase has come as a result of the spending of the population, that is, all consumers, but when you do not work in the administration, you are not affected by the mitigation measures, since you are not in the state budget", says Mr. Beqiri, adding that it is important for the state to help pensioners, people on social assistance. " And by this group I am mainly talking about the middle classes that suffer and have suffered all these years from strange fiscal policies that change every year, which sometimes pretend to stimulate and sometimes pretend to help, but which unfortunately never happens and they continue to suffer. This is the reason why the level of migration and the level of desire to emigrate, especially of this group of middle-class professionals, remains so high" , concludes Beqiri.
And while the Albanian government has been categorically against the abolition or reduction of VAT, as North Macedonia has done for the food basket or fuel, the solution in Albania, according to the economic expert, could be found very simply, but not by zeroing VAT. " We do not have a tax administration or a transparent structure in order to make this type of application possible. Every time we have done this, fraudsters and the high level of informality have benefited, which means that when this is applied, those who should not have benefited have also benefited, this is also due to the fact that our tax and fiscal administration is so weak that it increases and creates these holes itself," says Mr. Beqiri, adding that there are other ways that could ease the increase in prices, and one of them is to help the producer himself by reducing VAT.
"All those who produce domestic food basket products can be very well helped by accrediting them, those who have paid the state recognize the invoices, since now the invoices are online and say "During this year, this company that produces food products has paid VAT x million, we accredit them and normally it has to pay Tax-Profit and taxes x million and a correction is made at the end of the year, this is the best stimulus. This means that instead of paying 10 million new lek in taxes at the end of the year, pay half of them and recognize it", says the economic expert, adding that this method also helps the business to formalize, so that it is more interested in being as regular and transparent as possible so that at the end of the year they will recognize it. " Albania does not recognize these applications, or they do not know how to implement them or do not want to implement them", he concludes.
Although the increase in prices has also been felt in Europe, in Albania it turns out that 40 percent of income continues to be spent on food. But while the same thing does not stop for fuel, and for other products at the beginning of autumn, INSTAT announced that the construction index also showed an increase.
