The cost of living has deteriorated on several fronts in 2022, but it is in the prices of food and non-alcoholic beverages that the pressure is strongest and historic: according to the National Institute of Statistics (INE), consumer average prices for this group of so-called essential goods ended 19.9% above 2021 value last year, in what is the biggest increase since 1985, nearly four decades (37 years).
Also in the field of energy, several records were broken this year, in particular since the outbreak of the war in Ukraine (last March), with the class of so-called “energy products” (containing fuel for cars and others, various types gas, etc.) increased in price by almost 21% between December 2021 and the same month of 2022.
Again, one has to go back decades (more than three), to February 1991, to find greater pressure on energy costs (22%). However, there are some reductions in fuel costs, especially in December.
Still, according to the INE high, released yesterday (Wednesday) in December 2022, the consumer price index (CPI), an indicator that measures the general cost of goods and services for Portuguese consumers, recorded “year-over-year variation of 9 .6%”, after reaching a peak in October (10.1%), the highest value since May 1992.
If we look only at December, we have to go further back, to 1991, to find higher inflation in the later part of the year, which indicates INE’s long streak.
While there are signs that (extremely high) inflation may be moderating, the official institute shows that half of the list of the worst price increases in 2022 will be occupied by essential goods. Inflation hit food, actually. And it doesn’t seem to want to fall back.
Which became more expensive in the course of 2022
The “edible oils and fats” group increased by almost 34% in the year ended December, the basket of milk, cheese and eggs is 32% more expensive, the cost of vegetables and other horticultural products increased by more than 23%, meat is 21 % more expensive than at the end of 2021, as well as bread and cereals (up 21%).
It should be remembered that the average consumer basket is more expensive, but does not show jumps of this magnitude. As mentioned, the CPI rose 9.6% year-on-year in December.
Then the fuels. The price of gas is the item in the basket that has risen the most in 2022, with an impressive 70% increase. Electricity advanced 29%.
And heating fuels became 20% more expensive. The impact on the pockets of the Portuguese and many other populations in Europe is simply not greater because autumn and this early winter have been abnormally less cold than usual.
For this food/energy duo, Dinheiro Vivo (DV) calculations from INE databases show that the cost of the item “pets and related products” has increased by more than 21%.
And, unsurprisingly, thanks to strong tourism demand (which continues despite higher energy costs), accommodation services have become 21% more expensive on average in Portugal.
What was cheaper
For an inflation of 9.6% in December, there are goods and services whose prices have not risen or hardly increased; or even fell.
The same survey from DV shows that medical services are the consumption that has become cheaper over the course of 2022, with the average price falling by almost 15%.
Televisions and monitors are in second place, with the price measured in December having fallen by 9% compared to the end of 2021.
Inflation was also negative in hospital services: the price here was 8% lower than at the end of 2021.
Home and leisure technology is on the rise again, with the price of cameras dropping 6%. It is the fourth item with the most falling price on the list of nearly 200 goods and services considered by INE.
Computers and the like became 4% cheaper, inflation in “combined passenger transport” amounted to minus 1.2%. An almost identical decline occurred in games, toys and leisure goods, sports and camping goods.
It should also be noted the slight decrease of 0.4% in the case of footwear, a good in which the Portuguese economy is a specialist and a major exporter.
Medina’s estimate has been exceeded
The inflation that the Minister of Finance had estimated for 2022 (in the presentation of the National Budget for 2023 last October) was clearly exceeded by the worsening of the inflation crisis, which was very aggressive in October and November, which led the government to further go with support and subsidies to mitigate the impact on families and businesses.
In mid-October, Minister Fernando Medina still believed that it was possible to end last year with an average inflation of 7.4%. It didn’t happen: according to INE, the annual average was 7.8%.
But neither do the more unfavorable forecasts from the European Commission (in November said 8%), the OECD (8.3%, also estimated in November) and the Bank of Portugal (pointed to 8.1% in December).
In any case, INE reminds that the average annual variation of 7.8% recorded in the year 2022 as a whole is “significantly higher than the variation recorded in the year 2021 as a whole (1.3%)”.
So “this is the highest annual change since 1992” and “excluding energy and unprocessed foods from the CPI, the average rate of change was 5.6% (0.8% in the previous year)”.
“The year-over-year rate of change in aggregate CPI showed a strong increase throughout 2022, with greater intensity in the first half of the year,” INE adds to the high released yesterday.
“In the second half of 2022, the year-on-year change in CPI remained high and above the annual average, but there was a slowdown in prices in the last two months of the year. The average change registered in the second half ( 9.5%) was higher than the first (6.1%),” the institute says.
Luís Reis Ribeiro is a journalist for Dinheiro Vivo
Source: DN
