Expensive food, businesses lower prices due to government pressure, warn of increase in January

Food prices in Albania have been above the European Union average since 2025, while consumers' purchasing power is declining. In these conditions, the government's efforts to curb growth, also influenced by the rise in oil prices, through price restrictions, are encountering concerns from importers and producers about high fiscal costs.

Businesses warn that profit margins have narrowed and are calling for a reduction in VAT on basic food products, a proposal that they say should be considered with the new fiscal package.

Managers of supermarket chains, direct importers of food products, and local producers claimed to "Monitor" that the publication of prices on the "Price Mirror" platform and the requirement to keep them at low levels for a 3-month period is causing them losses.

According to them, to meet the demand for price reductions to ease consumer needs, businesses are marketing products with lower profit margins than before.

They report that profit margins calculated on the commercial price have fallen to around 6–7% from the 15 to 20% that were previously applied. For some products, in order to reduce the price, profit margins are not being applied. The profit margin is calculated on the commercial price of the products, and shows how much net profit the business has left, after deducting the cost of taxes, transportation, other operating expenses and employee salaries.

While for domestic producers, profit rates have fallen to 5–6%, from 7–8%.

According to market operators, this situation is limiting the ability to cover the costs of the activity, while warning that price reductions cannot continue after the beginning of January, when the period for not changing prices ends.

Managers of supermarket chains, as well as direct importers of grocery goods, claim that after this period they will have to review prices with increases or otherwise they will find themselves on the verge of survival. 

Since 2025, the domestic consumer is facing higher food prices than the European average, while per capita income remains much lower.

In 2025, according to Eurostat data, for the first time the price index reached above the European Union average, exceeding the reference of 100%. In Albania, the price level reached 103%. This means that if a food basket in EU countries costs an average of 100 euros, in Albania the costs for the food basket reach 103 euros.

From 2005 to 2015, the price index remained below the EU average. Data show that the high upward trend of the index has started since 2016.

The gap is even greater when comparing per capita income in purchasing power parity terms to the EU average. While food prices are around 3% above the European average, per capita income in Albania is only 43% of the EU average for 2025.

This indicator was 26% of the European average in 2005, while in 2010 it reached 34% and in 2015 it reached 38%. In subsequent years, fluctuations have been lower, while from 2021 an acceleration of growth is observed.

Per capita income reached 38% of the EU average in 2022, 43% in 2023, 47% in 2024 and 48% in 2025.

The price index compared to the EU average remains higher than in other countries in the region. In 2025, Serbia's index was 96.6%, below the EU average, while in Montenegro and Bosnia and Herzegovina it was 84.6%. North Macedonia recorded the lowest index, at 74.3%.

Historical data shows that about a decade ago, the food price index in Albania was at levels similar to what North Macedonia is recording today. This shows that, compared to the European average, Albania has had a significant increase in food prices even compared to countries in the region.

But price pressure on consumers has continued throughout 2026. In July, food and non-alcoholic beverages rose by 3.2% year-on-year in Albania, while in the European Union, the increase was only 0.6%. Price increases in the country are five times higher than in the EU.

Why do food products cost more in Albania?

Managers of supermarket chains that operate with grocery products and production representatives identify two main factors that are influencing high prices, the fiscal burden, including the high VAT rate and taxes on imported goods, as well as the high costs of domestic production, which have weakened the competitiveness of domestic products.

One of the main factors that importers raise as directly affecting the increase in the purchase price is the 20% Value Added Tax (VAT), which is also applied to basic food products. This tax is included in the price paid by the final consumer, directly affecting the cost of purchase.

Food importers estimate that transportation costs, which range from 6% to 8%, and customs duties, which they estimate amount to 10–15%, along with packaging costs, including cardboard, plastic, and paper, add about 20% to the purchase price of the imported product.

On top of this price, VAT of 20% is further applied, which is borne by the final consumer, as well as the business profit rate, which according to market operators' data ranges from 4% to 15% for supermarkets. According to these calculations, costs and taxes, together with profit rates, can increase the final price of the product by up to 50% compared to the import purchase price.

Luan Leka, entrepreneur of the "Conad" retail chain, has also previously explained to "Monitor" that prices in Albania are affected by two factors. He says that the first is the high VAT rate for food products, comparing the 20% rate in Albania with the rates that, according to him, are applied in Italy, Germany and England.

Another element is transportation and customs costs, which, according to Mr. Leka, can increase the price of imported products by 10–15%. He estimates that transportation represents about 6–7% of the cost.

Secondly, in addition to the fiscal burden and logistical costs, Mr. Leka also lists insufficient domestic production as a factor that increases dependence on imports. This exposes the market to external supply costs and limits the ability of domestic products to compete on price.

How do prices change?

The publication of food product prices on the "Price Mirror" platform continued to highlight the significant difference not only between commercial units and cities in the country, but also compared to those of the European Union and countries in the region.

According to calculations, a consumer will spend 1,412 lekë as a low value, for the purchase of 10 items of the food basket (including products such as: 1 kg of flour, rice, pasta, sugar, 1 liter of sunflower oil, milk, yogurt, 1 pack of butter, eggs, 10 grains, and 1 chicken).

The highest value of expenses, which the platform automatically calculates, reaches 2,225 lek. The difference between the most expensive and the cheapest basket is 813 lek or about 58%.

In the city of Durrës, prices are the same as in Tirana. For a basket of basic consumer goods, a consumer spends a minimum of 420 lek and a maximum of 1,513 lek.

"Monitor" calculated the expenses for 8 cities in the country, which resulted in the fact that only in the city of Lezha, the difference between the two values ​​is 694 lekë, the lowest among the cities included in the comparison.

Yesterday, a price difference was felt for some products, especially dairy products, between the selling price of domestic production and those imported from EU countries and the region.

Referring to the prices published on the platform, 1 kg of Greek yogurt of the “Faje” brand in the country is sold for 1,180 lekë or about 12 euros. In supermarkets in Athens, the same product is reportedly sold for 5.3 euros or 126% more expensive than in the country.

The price for 1 liter of packaged fresh milk (1.5% fat) produced in North Macedonia is 135 lek. For a similar package, but with the same fat percentage, the price for some local brands reaches 180 lek per liter, or 33.3% more expensive compared to the prices of imported products in the region.

Eurostat data, by food product category, show that in 2025 several product groups had price levels significantly above the EU average. The category of milk, other dairy products and eggs recorded the highest index, at 135.6% or 35.6% higher than the EU average. The EU reference is the value of 100%.

Compared to 2024, the price index for the dairy food group increased by 3.1%.

Prices reached 28.2% above the EU average in 2025 also for the second group “Prepared foods and other food products not elsewhere classified”. Sugar and confectionery also marked a high level, with an index of 123.1%, while oils and fats reached 112.5%.

On the other hand, some categories remained below the European average, such as cereals and cereal products, with an index of 84%, as well as vegetables, tubers, bananas and legumes, with an index of 91.2%. Fruits and nuts scored 92.1%, while meat and other land animal products reached 98%.

Why domestic dairy products have lost their competitiveness

Luis Ndreka, director of the milk processing company "Lufra", says that the loss of competitiveness has been influenced by several factors, including the high level of VAT on food basket products and the high production costs of raw materials in the country.

“Albania and Denmark are the only countries in the European Union that apply the same high VAT rate to grocery products and other goods. All other countries have reduced VAT rates for basic food products, up to 9%. The average VAT for these products ranges from 4% to 5%, while some countries do not apply VAT at all. Reducing VAT would bring prices down by 10–15%,” he says.

Meanwhile, some Western Balkan countries apply differentiated VAT levels to food basket products.

North Macedonia applies a system of differentiated VAT rates. For about 1,600 basic food products, including bread, flour, milk, eggs, oil, fruits and vegetables, etc., a reduced rate of 5% is applied.

A rate of 10% applies to certain categories, including services and food and beverages consumed at the place of service, while a general rate of 18% applies to the rest of the products and services not included in the categories with reduced rates.

Kosovo applies a two-rate VAT system. 8% is a reduced rate that applies to a list of basic products, including cereals, flour, bread, edible oils, milk and dairy products, and eggs. For products and services not included in the reduced rate categories, 18%, the standard VAT rate, applies.

Serbia applies a system with two main VAT rates. The standard rate is 20% and applies to most goods and services.

A reduced rate of 10% is applied to basic food products defined by law, which include bread, milk and flour, among others. While products such as coffee, chocolate and other items that are not included in the category of basic products are taxed at the standard rate of 20%.

Mr. Ndreka says that another factor that affects the prices of domestic products is the cost of milk at the farm, which in Albania is among the highest in Europe. According to him, the average price of cow's milk purchased by the farmer as raw material for processing ranges from 56 to 58 lek per liter (excluding VAT). At the door of a farm in a European country, excluding taxes and transport costs, it is traded for 36 lek per liter.

The difference is 56 to 63% more expensive than the price produced by Albanian livestock.

"This is related to the fragmentation of agricultural land, which increases the costs of producing feed for livestock. These costs are then reflected in the price of milk, as a raw material for the processing industry."

"In addition to reducing VAT as a short-term fiscal measure, as a long-term measure I would recommend encouraging the unification of farmers and the consolidation of farms. This process has begun and has also been part of the approach of the institutions, with the aim of consolidating agricultural and livestock production," emphasizes Mr. Ndreka.
 

Albanians spend almost three times more on food than the EU average

The high weight of food in Albanian consumers' budgets makes this category particularly sensitive to price increases. According to Eurostat data, processed by "Monitor", in 2025 spending on food and non-alcoholic beverages accounted for 29% of individual consumption in Albania, compared to only 10.4% in the European Union.

In value, consumption for this category reached around 5.9 billion euros in Albania, while the expenditure per capita was 2,513 euros, compared to 2,847 euros in the EU. So, although the expenditure on food per capita is lower than the European average, the weight it occupies in total consumption is almost three times higher.

The data also show significant differences in other consumption categories. In Albania, housing, water, energy and gas expenses account for 13.5% of consumption, compared to 18.8% in the EU.

Meanwhile, healthcare accounts for 7.6% in Albania, compared to 13.4% in the EU, while 4.9% is spent on restaurants and accommodation, compared to 7.2% in EU countries.

Overall, the consumption structure shows that Albanian families spend a significantly larger portion of their budget on food, which makes the price performance of this category a key factor for their economic well-being. Monitor