Portugal’s consumer price index (CPI) has slowed, with the annual rate decreasing to 4.0 percent in May 2023, a significant decline from 5.7 percent in April 2023. This slowdown is largely due to the base impact of major price increases in energy, gas and food goods in May 2022, as well as the value added tax (VAT) exemption applied to a variety of basic food items. This exemption is predicted to have a 0.8 percentage point impact on the total CPI.
The core inflation rate, excluding energy and unprocessed food goods, was estimated to be 5.4 percent in May, down from 6.6 percent in April. Notably, the rate of change for energy products fell to -15.5 percent in April 2023, from -12.7 percent in April 2023. According to Statistics Portugal, the index for unprocessed food fell to 8.9 percent from 14.1 percent the previous month.
On a monthly basis, the CPI decreased to -0.7% in May 2023, down from 0.6% in April. The 12-month average CPI also fell, falling to 8.2 percent from 8.6 percent the prior month.
The annual rate of the Portuguese Harmonized Index of Consumer Prices (HICP) in May was 5.4 percent, down from 6.9 percent in April. This rate is presently 0.7 percentage points lower than Eurostat’s forecast for the Eurozone, after being 0.1 percentage point higher in April. Discounting energy and unprocessed food, the Portuguese HICP in May was 7.3 percent, beating the Eurozone’s equivalent rate of 6.9 percent.
The decrease in CPI may be attributable mostly to price adjustments in petrol, gasoline, and other items. The annual inflation rate in May was 4.0 percent, matching the number from the flash estimate announced on May 31, compared to 5.7 percent in April.
