In Portugal, real per capita consumption (AIC) – an indicator that assesses the material well-being of households – was 17% lower than the EU average last year, a value that represents an increase of two percentage points compared to 2020. The data, released on Monday by Eurostat reports that Portuguese purchasing power has fallen to 83% in 2021.
Overall, real per capita consumption expressed in purchasing power standards (PPS) ranged from 63% to 146% of the EU average across the 27 member states.
In the same period under review, nine AIC member states scored per capita above the EU average. Luxembourg (46%) was the only member country with an AIC per capita of 25% or more above the EU average. In Denmark, Germany, the Netherlands, Belgium, Austria, Sweden, Finland and France, levels were 10% or more above the EU average.
Data from the European Statistical Office also shows that in thirteen member states, the per capita AIC was between the EU average and 25% lower. In this category, there were significant differences between member states: in Italy, Lithuania, Cyprus and Ireland, levels were 10% or less than the EU average, while Slovenia, Spain, the Czech Republic, Poland, Portugal, Malta and Romania were between 11% and 20% less. Estonia and Greece were 21% and 23% below the EU average, respectively.
There are still five member states that have an AIC per capita of 25% or more below the EU average. Croatia, Latvia, Hungary and Slovakia were between 27% and 30% below, while Bulgaria scored a per capita AIC 37% below the EU average.
And what about GDP? GDP per capita in 2021 also recorded significant differences between member states, ranging from 55% of the EU average in Bulgaria to 277% in Luxembourg. According to the European Statistical Office, Luxembourg’s high figure is “partly due to the large proportion of cross-border workers in the country’s total employment” who, despite their contribution to GDP, are not considered part of the resident population. Which is used to calculate per capita of the gross domestic product.
Among the 10 EU countries with an above-average GDP per capita, in addition to Luxembourg, Ireland stands out, the high level of which can be explained “in part by the presence of large multinational companies with intellectual property rights”.
It adds that the contract manufacturing associated with these assets contributes to GDP, while a significant portion of the income generated from this production is returned to the end-owners of the companies abroad.
In Portugal, the GDP per capita value was 74% of the EU average.
Inflation versus purchasing power And if there is indeed a price hike in 2021 – reducing purchasing power – this year inflation continues to reach record levels. In i, Henrique Tomé, an analyst at XTB, drew attention to rising inflation. “Inflation remains a major problem for Portugal,” the analyst began.
“The reality is that Portuguese households are increasingly losing their purchasing power, and this may have a more serious impact on the economy in the medium term,” he added.
For Henrique Tomé, there is no doubt that “this is the biggest challenge for Portugal, being able to keep the economy growing while inflation remains high. Once the Portuguese economy starts to show signs of slowing down, and if inflation remains high, we will be hit hard by the economic aspect.”
The opinion of Paolo Rosa, economist at Banco Carregosa, is not much different. While the Bank of Portugal estimates that inflation will be 5.9% this year, the economist recalls that inflation in our country is “mostly on the supply side, punished above all by rising fossil fuels and rising food prices.” , especially grain and meat”. This rise in prices, in his opinion, “tends to punish the disposable income of the families, reduce demand and reduce the company’s margins.”
In this context, “the probability of the scenario of stagflation and economic stagnation associated with high inflation increases, and this probability will be greater, the more permanent and dangerous the war in Ukraine, the higher the price of fossil fuels, which will intensify the rise in inflation and slow down economic growth.”
Remember, the economist Eugenio Rosa also warned of poverty in the country and the consequences of inflation. “Inflation harms those with fixed incomes, such as salaries, pensions, etc., because it does not increase with the speed and dimensions that appear in prices, which can increase every week, causing losses in purchasing power,” while “variable income owners benefit, as They can raise prices when they want.”
The economist also ensures that higher prices “causes a profound deterioration in the living conditions of workers and retirees and erodes savings.”
And prices can go up. The president of the European Central Bank predicted “unwelcome high inflation” in the eurozone in the coming months, as well as a recovery in the service sector, due to tourism, to support economic growth.
Food price hike Those who go to the supermarket regularly have already noted that prices have gone up and the analyzes of Deco Protest leave no doubt: the food group that Deco monitors weekly is now about 20 euros more expensive than it was at the end of February, before the invasion. in Ukraine.
After all, the price of a basket of basic foodstuffs increased by 0.95% (1.91 euros more) between June 8 and 15, bringing the cost to 203.20 euros. More than a hundred days after the start of the war in Ukraine (February 24), when Deco began this analysis, it cost 19.57 euros (10.66% more) to buy the same basket of food products.
But what products are we talking about? The basket breaks down a total of 63 essential food products such as turkey, chicken, hake, mackerel, onions, potatoes, carrots, bananas, apples, oranges, rice, pasta, sugar, ham, milk, cheese or butter.
In the week under analysis, the 10 products that Deco found the biggest price increases for were fresh hake (17%), Carolina rice (9%), frozen peas (8%), sea bass (6%), and black-fish. . Swordfish (6%), hake (6%), bream (4%), red potatoes (4%), goldfish (4%) and zucchini (3%).
But, when analyzing product categories with only the largest price increases, between February 23 and June 15, cooking oil is the most outstanding, with a 50% increase.
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