Portugal Falls into Deflation for 1st Time since 2015

Consumer prices in Portugal went down 0.3 percent from a year earlier in July 2019, compared to a 0.4 percent rise in the previous month and matching the flash estimate. It was the first month of deflation since February 2015, mainly due to prices of restaurants & hotels, clothing & footwear and housing & utilities.

Year-on-year, decreases in prices were seen for restaurants & hotels (-1.5 percent vs 2.2 percent in June); clothing & footwear (-5.8 percent vs -3.8 percent), due to a more intense end of season discounts compared to 2018; food & non-alcoholic beverages (-0.1 percent vs 0.4 percent); furnishings (-0.2 percent vs 0.3 percent); recreation & culture (-0.1 percent vs -0.3 percent) and communications (-4 percent vs -3.8 percent). In addition, cost was flat for housing & utilities (vs 0.6 percent), amid a decrease in the VAT rates for electricity and natural gas; and slowed for transport (0.5 percent vs 0.9 percent).

Core consumer prices, which excludes prices of energy and unprocessed food products edged down 0.1 percent from a year earlier, compared to a 0.6 percent gain in the prior month and matching the preliminary estimate. It was the first drop in core consumer prices since July 2014.

On a monthly basis, consumer prices fell 1.3 percent, as initially estimated, after being flat in the preceding month.

The harmonized consumer price index declined 0.7 percent year-on-year (vs 0.7 percent in June) and went down 1.7 percent month-over-month (vs 0.4 percent in June).

Portugal Falls into Deflation for 1st Time since 2015

INE | Luisa Carvalho | luisa.carvalho@tradingeconomics.com
8/12/2019 10:51:18 AM