The inflation rate should register a significant drop from April onwards, with inflation expected to be below 5.1% for months in the second half of the year, Finance Minister Fernando Medina said as he presented the government’s Stability Programme for 2023-2027 in Lisbon on Monday.
“What will happen is that from the month of April, May (…😉 the inflation rate will register a significantly lower trend,” compared to what has occurred in these first months of the year, Medina said in Lisbon on Monday.
Under the government’s Stability Programme (SP), inflation is expected to fall to 5.1% this year, up from the 4% that was estimated in October. In 2024, it will drop to 2.9%, the SP adds.
The minister said that this annual 5.1% inflation rate for the year means there would be “months of inflation of less than 5.1%” for the second half of the year. ” This “phenomenon of falling inflation has to do with what is happening in the energy markets,” and also in the industrial component, he added.
The minister explained that reduced inflation does not mean a drop in prices but rather slower prices. This does not rule out some goods seeing an “effective decrease in prices”, he added.
The SP’s macroeconomic scenario for 2023-2027, which the government will submit to the European Commission and parliament, predicts a downward trajectory for the Harmonised Index of Consumer Prices (HICP).
At the same time, the inflation now predicted for the year is an upward revision compared to the 4% forecast in October in the state budget for 2023 and is closer to the 5.5% forecast by the Bank of Portugal (BoP) and the 5.9% by the Public Finance Council (CFP).
Among the main international economic institutions, the European Commission forecasts a rate of 5.4%, the International Monetary Fund (IMF) 5.7%, and the Organisation for Economic Cooperation and Development (OECD) 6.6%.
The year-on-year change in the Consumer Price Index (CPI) slowed to 7.4% in March, down 0.8 percentage points from the previous month and down for the fifth consecutive month, according to data released by the National Statistics Institute (INE) on 13 April.
In the SP, the government included an upward revision of the growth forecast for the Portuguese economy this year to 1.8% (compared to the 1.3% forecast in October). It revised the budget deficit downwards, predicting it will be 0.4% this year, below the 0.9% in the state budget.
As for the public debt ratio, the executive estimates that it will fall to 107.5% this year and will be below 100% in 2025.
(Lucília Tiago | Lusa.pt)
Source: euractiv.com
