The European Commission upgraded on Monday the inflation rate projection in Portugal to 5.1% this year, expecting a moderation to 2.7% in 2024, reflecting first energy prices and then food prices.
In the spring economic forecast released today, Brussels notes that after reaching 10.2% in the fourth quarter of 2022, inflation measured by the Harmonised Index of Consumer Prices (HICP) moderated to 8.4% in the first quarter of 2023, a reduction driven largely by lower energy prices, while food prices remained high.
The EU executive believes inflation is expected to moderate further over the forecast horizon, “driven initially by the energy price index and subsequently by food and non-industrial goods”.
“In 2023, the moderation in food prices is also supported by a suspension of VAT rates for essential food products, effective from 18 April until the end of October,” it noted.
In previous projections, Brussels forecast an inflation rate for Portugal of 5.4% this year and 2.6% in 2024.
In the Stability Programme, delivered in April, the Portuguese government forecast an inflation rate of 5.1% this year and 2.9% in 2024.
The European Commission today revised upwards its forecast for the eurozone’s inflation rate for 2023 to 5.8% from 5.6% previously, admitting that it is proving “more persistent”.
Brussels points out that the inflation rate “has again surprised” with its upward trend, so that it is now forecast at 5.8% this year in the single currency area, compared to 5.6% in the previous winter projections published in February.
For 2024, the forecast is for an inflation rate in the eurozone of 2.8% when previously 2.5% was expected.
For the EU as a whole, inflation is projected at 6.7% this year and 3.1% the next, compared with 6.4% and 2.8%, respectively, in the winter forecast.