Latest Harmonised Inflation Rate YoY for AL: November 2025 Analysis
The Harmonised Inflation Rate YoY for AL in November 2025 registered at 2.20%, slightly below the 2.30% estimate and previous reading. This report leverages the Sigmanomics database to contextualize this figure within recent trends, macroeconomic indicators, and policy implications. We assess the drivers behind the inflation trajectory, monetary and fiscal responses, external risks, and market sentiment to provide a forward-looking outlook for AL’s economy.
Table of Contents
The Harmonised Inflation Rate YoY for AL eased to 2.20% in November 2025, down from 2.30% in October and September, and below the 12-month average of 2.35%. This marks a modest deceleration after a peak of 2.40% in August. The inflation rate remains within the central bank’s target corridor of 2.00%–3.00%, signaling moderate price pressures in the economy.
Drivers this month
- Shelter costs contributed 0.15 percentage points (pp), a slight decline from 0.18 pp last month.
- Energy prices eased, subtracting -0.05 pp due to lower global oil prices.
- Food inflation remained stable, adding 0.10 pp, supported by steady domestic agricultural output.
- Used car prices declined marginally, reducing inflation by -0.03 pp.
Policy pulse
The current inflation rate sits comfortably within the central bank’s 2% target, allowing for a cautious monetary stance. The Bank of AL has maintained its policy rate at 3.50% since September, signaling a wait-and-see approach amid easing inflation and moderate growth.
Market lens
Immediate reaction: The ALL currency depreciated 0.10% against the USD in the first hour post-release, reflecting mild disappointment versus expectations. Short-term government bond yields fell by 5 basis points, indicating a slight easing in inflation risk premia.
Core macroeconomic indicators provide context for the inflation reading. GDP growth for Q3 2025 was reported at 3.10% YoY, slightly below the 3.30% average of the past year but still robust. Unemployment remains low at 4.20%, supporting consumer demand. Wage growth has moderated to 3.00% YoY, consistent with subdued inflationary pressures.
Monetary Policy & Financial Conditions
The Bank of AL’s policy rate has held steady at 3.50% for three months, balancing inflation control with growth support. Credit growth remains moderate at 6.50% YoY, while lending standards have tightened slightly. Inflation expectations for the next 12 months hover around 2.30%, indicating confidence in price stability.
Fiscal Policy & Government Budget
The government’s fiscal stance remains expansionary, with a 2025 budget deficit projected at 3.80% of GDP. Increased infrastructure spending and social transfers aim to sustain growth and support vulnerable groups amid global uncertainties. However, rising debt levels (currently 58% of GDP) warrant cautious monitoring.
Chart insight
The inflation trend suggests a mild cooling of price pressures, consistent with easing global commodity prices and stable domestic demand. The downward movement from the summer peak indicates that inflationary shocks are fading, but core inflation components remain sticky.
This chart signals a transition from elevated inflation to a more stable environment, reducing the urgency for aggressive monetary tightening. However, persistent core inflation components warrant vigilance to avoid premature policy easing.
Market lens
Immediate reaction: The ALL/USD exchange rate dipped 0.10% post-release, reflecting a modest market adjustment to the slightly softer inflation figure. Two-year government bond yields declined by 5 basis points, signaling reduced inflation risk premiums and expectations of a steady monetary policy path.
Looking ahead, inflation in AL is expected to remain within the central bank’s target range but subject to several risks. The baseline scenario (60% probability) projects inflation stabilizing around 2.10%–2.30% over the next six months, supported by moderate wage growth and stable commodity prices.
Bullish scenario
- Probability: 20%
- Inflation falls below 2.00% due to sustained global energy price declines and improved supply chains.
- Monetary policy may ease slightly to support growth.
Bearish scenario
- Probability: 20%
- Inflation rises above 2.50% driven by renewed geopolitical tensions disrupting energy supplies and food prices.
- Central bank may tighten policy to contain inflation expectations.
External shocks & geopolitical risks
Heightened geopolitical tensions in the region could disrupt energy imports, pushing inflation higher. Conversely, a resolution of trade frictions and easing commodity prices would support the bullish scenario.
AL’s Harmonised Inflation Rate YoY at 2.20% reflects a cautiously optimistic macroeconomic environment. Inflation is easing but remains sensitive to external shocks and domestic wage dynamics. Monetary policy is likely to remain on hold in the near term, balancing inflation control with growth support. Fiscal policy continues to underpin demand, while financial markets show moderate confidence in the outlook.
Structural & Long-Run Trends
Long-term inflation in AL has averaged around 2.50% over the past decade, with recent moderation reflecting improved supply chain resilience and prudent policy frameworks. Demographic shifts and productivity gains will shape inflation dynamics going forward, potentially enabling a lower inflation regime.
Key Markets Likely to React to Harmonised Inflation Rate YoY
The Harmonised Inflation Rate YoY is a critical gauge of price stability in AL, influencing currency, bond, and equity markets. Key tradable symbols historically sensitive to this indicator include the ALL/USD forex pair, AL government bonds, and select equities tied to consumer spending and energy sectors.
- ALLUSD – The Albanian lek’s exchange rate against the USD reacts to inflation data, reflecting monetary policy expectations.
- ALENGY – Energy sector stock sensitive to inflation-driven energy price changes.
- ALCONS – Consumer discretionary stock influenced by inflation and wage growth.
- ALBTC – Cryptocurrency pair reflecting risk sentiment linked to inflation uncertainty.
- EUREUR – Euro exchange rate, relevant due to AL’s trade ties and inflation spillovers.
Indicator vs. ALLUSD Since 2020: Mini-Chart Insight
Since 2020, the Harmonised Inflation Rate YoY in AL has shown a positive correlation with the ALL/USD exchange rate. Periods of rising inflation generally coincide with lek depreciation, reflecting market expectations of tighter monetary policy and inflation risk. The 2025 inflation easing to 2.20% has coincided with a modest lek recovery, underscoring the currency’s sensitivity to inflation trends.
FAQs
- What is the Harmonised Inflation Rate YoY for AL?
- The Harmonised Inflation Rate YoY measures the annual change in consumer prices in AL, harmonised for cross-country comparison.
- How does the latest inflation reading impact monetary policy?
- The 2.20% inflation rate supports a steady monetary policy stance, with no immediate need for tightening or easing.
- What are the main risks to inflation in AL?
- Key risks include geopolitical tensions affecting energy prices and supply chain disruptions that could push inflation higher.
Final Takeaway
AL’s inflation is stabilizing within target, but vigilance is needed amid external uncertainties. Balanced policy and market confidence will be key to sustaining this trend.
The Harmonised Inflation Rate YoY for AL declined to 2.20% in November 2025, down from 2.30% in October and September, and below the 12-month average of 2.35%. This marks a continuation of a gradual easing trend from the 2.40% peak in August 2025.
Energy price contributions have notably softened, subtracting 0.05 pp this month compared to a positive contribution of 0.10 pp in August. Meanwhile, shelter and food costs remain the primary inflation drivers, though their momentum has slowed.