Inflation falls by 1.7% to reach 4% in May

The year-on-year rate of change in the consumer price index (CPI) fell to 4.0% in May, 1.7 percentage points lower than in April, according to the flash estimate released this Wednesday by the National Institute of Statistics (INE).

According to INE, “Based on the information already gathered, the year-on-year rate of change in the consumer price index (CPI) will have fallen to 4.0% in May 2023, a rate lower by 1.7 percentage points (pp) to that observed in the previous month”.

As he explains, “this slowdown is partly explained by the base effect resulting from the rise in electricity, gas and food prices in May 2022 and also by the VAT exemption on a range of essential food products”.

The underlying inflation indicator (total index excluding unprocessed food and energy) recorded a 5.5% swing in May (6.6% in the previous month).

The evolution of the energy products index fell to -15.5% (-12.7% last month) and the unprocessed food products index slowed down to 8.9% (14.1% in April).

Compared to the previous month, the CPI variation will have been -0.7% in May (0.6% in April and 1.0% in May 2022), with an estimated average variation over the last 12 months of 8.2 % (8.6% in the previous month).

The Portuguese Harmonized Index of Consumer Prices (HICP) recorded a year-on-year change of 5.4% in the month under review, compared to 6.9% in April.

The final data for the May 2023 CPI will be published by INE on June 14.

INE confirms year-over-year GDP growth

Gross domestic product (GDP) grew 2.5% in the first quarter from the same period last year and 1.6% from the previous quarter, the National Institute of Statistics (INE) confirmed on Wednesday.

In the ‘National Quarterly Accounts’ released this Wednesday, the statistical institute therefore maintains the advanced values ​​in the rapid estimate of April 28.

INE explains that “domestic demand made a zero contribution” to the year-on-year GDP change in the first quarter, after contributing 2.3 percentage points in the previous quarter.

“Private consumption slowed and investment fell, mainly due to the negative contribution from variation in inventories, largely related to the dynamics of international trade flows,” he adds.