Prices are (or will) go up, but Portugal has some of the lowest inflation rates in Europe – Observer
The devaluation of these categories in the calculation of information is one of the technical reasons that explain why you are informed in more moderate Portugal, for now, than in other countries. Sectors where prices are being pulled by the economic recovery, such as transport, saw their relative weight decrease, which hinders the contribution to information. Countries where tourism and catering have traditionally had less weight, the recessive effect of the pandemic was more homogeneous and this reweighting did not occur, which is why it is more exposed to price movements associated with activities.
On the other hand, the rise in prices that most countries are experiencing is also the result of the comparison effect with a year in which prices fell due to the forced halt of economies and demand due to restrictions on circulation. When compared with the values practiced in 2019, pre-pandemic, the variations may be smaller.
There are also countries that, due to the operating rules of some markets, watch a comment from the divergent from Portugal. This is the case in Spain. Despite being right next door and having an integrated Iberian wholesale electricity market, Mibel, the disclosure rate in October reached a galloping 5.5%, the highest value in 29 years.
INE’s official source justifies: “In comparison with the other countries of the European Union, and in particular with Spain, it is important to take into account the different aspects of the prices of some relevant products, given the different institutional and fiscal arrangements, as is the case of electricity. ” A part of the Iberian differential results from “substantial differences in the evolution of the price of electricity paid by final consumers”, that is, households.
In Portugal, the annual rule for the correction of tariffs regulated by the Regulatory Authority for Energy Services (ERSE) means that suppliers in the liberalized market follow a policy of price stability, updating them as well. Even in 2021, the year in which ERSE carried out two extraordinary updates to respond to the rise in the cost of purchasing energy, several traders did not change the prices of contracts already entered into.
In Spain, electricity prices paid by domestic consumers are much more exposed to Mibel quotations, which led the Spanish Executive to take more muscular measures to curb the escalation that has meanwhile has already reached other products and services with weight in Spanish information.
Companies are less protected by this ERSE hat and already face in Portugal to pay components of the energy bill, but this effect only reaches the consumer price index to the extent that this cost is transferred to final products and services. And that is what many companies say they will do by the end of the year.
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If the information is already at 1.8%, what is the meaning of the proposal to update 0.9% of civil service salaries made by the Government? The acceleration that is accelerating, especially from September onwards, is the same as the same period last year, in other words, the evolution compared to the same period last year, which, as already mentioned, had prices depressed by the first and second waves of the pandemic.
The indicator used to determine wage increases, social benefits and some administrative prices such as transport is average information for the last 12 months. It is a political criterion that in some cases is expressed in diplomas, but which has some economic rationality, as it allows for the neutralizing of some extraordinary price jumps that occur in just one month and not a trend. The average update rate for the last 12 months (until October 2021) is 0.8%.
In the case of public transport, the average rate of the last 12 months without housing between October 2020 and September 2021 is used, which was 0.57%. The same rule is followed for updating rents, but having as reference the average annual rate until August, which was 0.43%.
There are other administrative prices that follow year-on-year exchange rates. This is the case of tolls, which will rise by 1.83% in 2022 (published in October).
INE confirms 1.8% price rise in October