Inflation slowed to 2.1% in October, according to a quick estimate from the National Institute of Statistics (INE) released on Tuesday. This slowdown is mainly due to the base effect of food and energy prices recorded a year ago.
“The main contribution to this slowdown is made by the base effect associated with the monthly increase in food prices (2.1%) and energy (6.7%) recorded in October 2022, with an emphasis on natural gas (77.4%),” – he explains.INE.
In September, inflation was 3.6%. This means that over the month, inflation in Portugal recorded a strong slowdown – by 1.5 percentage points compared to the previous month.
Core inflation, which excludes unprocessed food and energy items (as they are more susceptible to price fluctuations), will also slow to 3.5% from 4.1% (4.1% in the previous month). If quick estimates are confirmed, this will be the ninth month of weakening in so-called “critical inflation,” which measures the “contagion” of price increases between different products in the consumer basket.
Index related to energy products, which was accelerated over the last two months Without leaving negative territory, it slowed down again. A quick estimate shows that the index’s year-on-year change in October was -12%, down from -4.1% in September. In other words, energy prices are now 12% cheaper than a year ago.
On the other hand, the raw food index will slow down from 6% to 4% in October. In addition to the base effect, the slowdown in year-on-year changes in this indicator is facilitated by the exemption from VAT for a basket of essential products.
Compared to the previous month, IPC deviation was -0.2% compared to 1.1% in the previous month. “The monthly fluctuation in food prices was estimated to be 0.1% and for energy prices at 2.1%,” INE said. The average change over the last twelve months was 5.7% (6.3% in the previous month).
The Portuguese Harmonized Index of Consumer Prices (HICP), which compares price movements in Portugal with those in other European Union countries, recorded an annualized deviation of 3.3%. In September, the annual deviation of the HIPC index was 4.8%.
Final IPC data for October will be published on November 13th.