Prices go down with the pandemic. Inflation rate stood at -0.7% in May

The inflation rate in Portugal dropped further in May, reaching -0.7%, after being -0.2% in April. This is the lowest figure since July 2014 (-0.87%), according to the historical series of the National Statistics Institute (INE).

Figures released this Friday by INE suggest that the pandemic crisis is having a deflationary pressure on the Portuguese economy.

“Based on the information made available until the date of the present press release, the Consumer Price Index (CPI) annual rate was estimated at -0.7% in May 2020 (-0.2% in April),” the statistics office explains.

Portugal has accumulated two consecutive months of negative inflation. Also last summer, the inflation rate fell to negative values for three months, but the decline now recorded is more intense.

One factor for this decline is the sharp drop in oil prices: “The annual rate of change of the index for energy products is estimated to be -11.2%, a rate even lower than in April (-9.4%),” points out INE.

Removing this fact, in what we call underlying inflation (also excluding unprocessed food), it fell from -0.2% in April to -0.4% in May.