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Portugal falls into deflation for first time since 2015

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Christian Fernsby |
Portugal street
Europe   Portugal street

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.

Topics: Portugal deflation

It was the first month of deflation since February 2015, mainly due to prices of restaurants and hotels, clothing and footwear and housing and utilities.

Year-on-year, decreases in prices were seen for restaurants and hotels (-1.5 percent vs 2.2 percent in June); clothing and footwear (-5.8 percent vs -3.8 percent), due to a more intense end of season discounts compared to 2018; food and non-alcoholic beverages (-0.1 percent vs 0.4 percent); furnishings (-0.2 percent vs 0.3 percent); recreation and culture (-0.1 percent vs -0.3 percent) and communications (-4 percent vs -3.8 percent).

In addition, cost was flat for housing and 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).

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