Portugal was one of the EU member states that recorded one of the biggest rises in inflation, going from 9% in June to 9.4% in July, a value above the eurozone average which compares to an average of 1%. a year ago. Data from Eurostat revealed that the rate was 8.9% in the eurozone versus 8.6% in the previous month and well above the 2.2% recorded in the same period last year. In the European Union, the proportion was 9.8%.
The highest annual rates were recorded in Estonia (23.2%), Latvia (21.3%) and Lithuania (20.9%), while the lowest were recorded in France, Malta (6.8% in both cases) and Finland (8%). However, compared to June, Eurostat notes, annual inflation declined in six member states, remained stable in three and rose in the remaining 18.
Numbers that don’t surprise Nuno Melo. The XTB analyst says this rise was “expected as prices of food, alcohol and tobacco accelerated (9.8% compared to 8.9% in June), as well as non-energy industrial goods (4.5% vs. 4.3%) and services (3.7% vs. 3.4%) “Noting that only the cost of energy slowed down due to the drop in oil last month (39.6% vs. 42%), however, that was not enough to offset the remaining increases.” Excluding energy, the inflation rate also rose from 4.9% to 5.4%, The core index, which does not include the cost of energy, food, alcohol and tobacco, rose from 3.7% to 4%. It adds that compared to the previous month, consumer prices rose 0.1%.
João Queiroz, head of trading at Banco Carregosa, acknowledges to Nascer do SOL that the values are in line with estimates, given “continuing high energy prices, such as crude oil and gas, and higher prices for agricultural products. Like wheat and corn, against the low euro it is close to parity against the dollar”, noting also that “disruptions in the logistics chain have been regulated but at a slow pace, like sea freight, but with a high corrective potential.”
New records in perspective
Nono Melo believes that inflation should remain high and even accelerate more due to the increase in demand for oil in the coming fall and winter, noting that “in this period it is common to see a decrease in demand, but this can be compensated by an increase in oil consumption in relation to gas.
And the warnings don’t stop there. The XTB analyst also states that “many countries with oil-fired power plants may decide to restart their operations, given that the price of gas in a barrel of oil equivalent is two to three times higher, including costs associated with carbon emissions allowances. This would lead to Until the energy component leads to a further increase in inflation by the end of the year.”
On the other hand, Joao Queiroz believes that expectations indicate that the prices of some raw materials, such as crude oil, base metals, industrial and agricultural products, may not renew the increases already recorded this year, «which would stimulate the development to a scenario that inflation will not be The main issue and focus will be on the “soft contraction” of the European economy in the face of a continuing energy crisis that is currently largely dependent on natural gas (which will be felt next winter).”
A situation which, according to Banco Carregosa’s head of trading, should be the central argument for inflation staying high, but with a maximum that may have already been recorded this summer. He asserts that «therefore, we will start the path of price stability (lower inflation pressure), which allows central banks to focus more on the topics of economic stagnation / deflation, employment potential and competitiveness of their economy».
Given this scenario, many governments are introducing new aid packages worth billions of euros aimed at mitigating the effects of price hikes on families and businesses. Portugal is not oblivious, and has already waved a package for September, however, the details are not yet known.
But the answer does not stop there. Nuno Melo also recalls that “similar to what other central banks have done, the European Central Bank must accelerate the pace of interest rate increases in order to curb consumption and thus inflation in the medium term.”
For Joao Queiroz, the solution is to stabilize global supply “given that the shock is concentrated in this area rather than increased growth in demand from families and companies”, accompanied at the same time by “increasing diversification, reducing risks and more. Dependence on import markets (because population growth does not stagnate).
The official also advocates that other geographic regions, such as Africa and Central and South America, should be the target of larger and more tested investments, “in addition to seeking to promote the development of these blocs by reducing strategic dependence on less open and less democratic societies,” adding that “the few Globalization is associated with rising prices and thus inflationary processes, but also greater inequality in the distribution of countries’ wealth also contributes negatively to the diversification of raw material markets, which represents a greater risk than inflation.”
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