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High prices, slowing savings rate as families consume more

2026-07-27 08:04:00, Ekonomi CNA

High prices, slowing savings rate as families consume more

After strong savings growth in the years following the pandemic, the Albanian economy is entering a phase where households and other sectors are spending an increasingly larger portion of their income instead of saving it.

INSTAT data shows that gross savings reached 536 billion lek in 2025, up from 517 billion lek a year earlier, an increase of only 3.6%. In 2024, this change was 10.5%.

Although savings have reached an all-time high, the pace of expansion has slowed significantly compared to previous years.

In 2021, gross savings were around 344 billion lek. It reached the level of 406 billion lek in 2022 with an annual growth of 18 percent. Gross savings in the economy grew at double-digit rates after the pandemic, but this trend changed in 2025, as the expansion was very modest.

This curb on savings came at a time when household disposable income continued to expand and wages marked another year of strong growth.

The data show that households are not channeling additional income into savings, but are increasingly using it for consumption. This development also explains the continued growth of private consumption, which remains the main engine of the Albanian economy. Also, the cost of living has increased significantly due to higher prices in all consumer groups and especially some services such as rent and educational services, which are eroding the ability of the middle class to save.

From a macroeconomic perspective, a higher level of consumption supports economic growth in the short term, as it stimulates demand for goods and services. But a slower pace of savings may limit domestic resources for investment in the future and increase dependence on external financing.

As households feel more secure in consuming, businesses face lower profits and higher costs, leading to a combination that could change the pattern of economic growth in the coming years./ Monitor





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