Portugal's CPI slows down, reports 4.0% in May 2023

16 Jun '23

2 min read

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Portugal's annual CPI dropped to 4.0 per cent in May 2023 from 5.7 per cent in April, reflecting past price rises and VAT exemptions on essential food items.
The core inflation rate fell to 5.4 per cent from 6.6 per cent.
Monthly CPI was -0.7 per cent, down from 0.6 per cent, and the 12-month average CPI dropped to 8.2 per cent from 8.6 per cent.

Portugal’s consumer price index (CPI) has witnessed a slowdown, with the annual rate falling to 4.0 per cent in May 2023, a notable drop from the 5.7 per cent reported in April 2023. This deceleration primarily reflects the base effect from significant price rises in electricity, gas, and food products that took place in May 2022, as well as the value added tax (VAT) exemption applied to various essential food items. The estimated impact of this exemption on the overall CPI is around 0.8 percentage points.

The core inflation rate for May, excluding energy and unprocessed food products, was reported to be 5.4 per cent, a decrease from April's 6.6 per cent. Notably, the rate of change for energy products declined to -15.5 per cent, compared to -12.7 per cent in April 2023. The index for unprocessed food dropped to 8.9 per cent from 14.1 per cent in the previous month, Statistics Portugal said in a press release.

On a monthly basis, the CPI fell to -0.7 per cent in May 2023, down from April's 0.6 per cent. The 12-month average CPI also decreased, standing at 8.2 per cent, compared to 8.6 per cent in the previous month.

May's Portuguese Harmonised Index of Consumer Prices (HICP) annual rate was recorded at 5.4 per cent, a reduction from the 6.9 per cent observed in April. This rate is now 0.7 percentage points below the Euro area figure estimated by Eurostat, having been 0.1 percentage points above in April. Discounting energy and unprocessed food, the Portuguese HICP in May was 7.3 per cent, exceeding the corresponding rate for the Euro area, estimated at 6.9 per cent.

The downward movement in CPI can be mainly attributed to price changes in gas, fuels, and other products. The annual inflation rate in May, which echoes the figure from the flash estimate released on May 31, registered at 4.0 per cent, compared to 5.7 per cent in April.

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