LISBON: Portuguese consumer prices fell more than expected during January as retailers heavily discounted clothes and shoes to lure shoppers whose reluctance to spend reflects the country’s deep recession.
Prices dropped 1.2 per cent from December while they rose 0.2 per cent year on year, National Statistics Institute INE said on Tuesday.
“This ...reflects Portugal’s economic recession,” said Filipe Garcia, head of Informacao de Mercados Financeiros economic consultants in Porto.
“Retailers had to come up with very strong promotional sales to adapt to this reality ... to the consumption dynamics of households who are clearly worried about further reduction in disposable income,” he added.
Portugal has imposed painful tax hikes and pay cuts under the terms of a 78-billion euro EU/IMF bailout over the past two years, with the largest tax increases in living memory kicking in from 2013.
The austerity has hit consumer demand and made the recession, which began in 2011, the country’s deepest since the 1970s.
The INE said clothing and footwear prices slumped 19 per cent last month from December, while a drop in fuel and transport prices also contributed to the overall decline. Analysts surveyed by Reuters had expected a month-on-month CPI change between zero and -0.1 per cent.
January’s consumer price index starts a new statistical series based on fresh 2012 data, the INE said. In the previous series, inflation was zero in December when compared to November and totalled 1.9 per cent from a year earlier.