Finance: Cost of living news in Portugal

The government has published an ordinance in the Diário da República reducing the temporary discount on the Tax on Petroleum Products (Imposto sobre os Produtos Petrolíferos or ISP). The adjustment, effective next week, lowers the discount by 1.9 cents for diesel and 1.8 cents for petrol, reflecting expected market price decreases.

Housing loan contracts reviewed in June will see their largest payment increases since December 2023, with some monthly costs rising by up to 70 euros. Analysts attribute this pressure on household budgets to indirect economic effects stemming from the ongoing conflict in Iran.

Lisbon is currently the most expensive city in Europe for renters, with the cost of a one-bedroom apartment consuming approximately 99% of the average local salary. This housing crisis is compounded by a significant rise in the cost of living since 2022, with essential food and energy prices frequently outpacing general inflation.

Eurostat data shows Portugal experienced one of the highest monthly inflation increases in the Eurozone during April, rising by 1.9%. Experts suggest that volatility in international oil markets, particularly tensions near the Strait of Hormuz, is contributing to higher energy and food costs for families.

The government is increasing the extraordinary discount on the Tax on Petroleum and Energy Products (Imposto sobre os Produtos Petrolíferos e Energéticos or ISP) for both diesel and petrol. This temporary measure, effective Monday, aims to offset rising fuel prices forecasted for the coming week.

The 'Portugal, Balanço Social 2025' report from the Nova School of Business & Economics (Nova SBE) indicates that the risk of poverty in Portugal fell to 15.4% in 2025. Despite this improvement, the study highlights persistent challenges, noting that 9% of employed individuals remain poor and that vulnerable groups, such as the unemployed and single-parent households, face significantly higher risks.

Fuel prices in Portugal are expected to change again between May 18 and May 24, with gasoline prices projected to rise by approximately 4 cents per litre. While diesel prices may see a slight decrease of 1 cent, gasoline is expected to become more expensive than diesel, reaching an estimated average of 2.016 euros per litre.

The average gross monthly salary in Portugal increased by 5% in the first quarter of 2026 compared to the same period last year, reaching 1,611 euros. According to the National Statistics Institute (Instituto Nacional de Estatística or INE), the real wage increase, adjusted for inflation and cost of living, was 2.7%.

A study by the Francisco Manuel dos Santos Foundation (Fundação Francisco Manuel dos Santos or FFMS) indicates that higher education in Portugal provides a strong financial return, with master's degree holders earning 40% to 49% more than those with only secondary education. However, the study highlights that families bear 30% of institutional funding costs, which is more than double the European Union average and acts as a significant barrier to access.

The cost of a basket of 63 essential food items decreased by 1.48 euros to 260.41 euros this week, according to the consumer protection association Deco PROteste. Despite this weekly decline, the National Statistics Institute (Instituto Nacional de Estatística or INE) reported that the overall inflation rate in Portugal accelerated to 3.3% in April, largely driven by rising fuel prices.

Socialist Party (Partido Socialista or PS) Secretary-General José Luís Carneiro has invited Prime Minister Luís Montenegro to visit local markets to witness the impact of rising living costs. Carneiro accused the Chega party of acting as a political 'crutch' for the government while criticizing the rejection of PS proposals to reduce taxes on essential goods.

Fuel prices are set to increase this Monday, with diesel rising by approximately 10 cents and petrol by 6.5 cents per litre. In response, the Socialist Party (Partido Socialista or PS) has renewed its call for the government to lower the value-added tax (Imposto sobre o Valor Acrescentado or IVA) on fuel from 23% to 13%. Meanwhile, the price of a 13kg bottle of butane gas has reached a record 39 euros, further impacting household budgets.

The Socialist Party (Partido Socialista or PS) is calling for a reduction in the value-added tax (Imposto sobre o Valor Acrescentado or IVA) on fuel from 23% to 13%. MP João Torres announced plans to summon oil company representatives to Parliament to discuss the measure ahead of a significant price increase expected this week. The PS also renewed its proposal for zero VAT on essential food items, a move the current government continues to reject.

President of the Republic António José Seguro visited the Ovibeja agricultural fair this Saturday, expressing understanding for the difficulties faced by farmers. He specifically addressed the impact of the Middle East conflict and the blockade of the Strait of Hormuz, which he stated should never have closed. Seguro emphasized the need for affordable fertilizer imports to prevent further increases in food prices for Portuguese consumers.

Drivers in Portugal will face higher costs at the pump starting Monday, with diesel prices expected to increase by up to 9.5 cents and petrol by 6 cents per litre. According to the Automobile Club of Portugal (Automóvel Club de Portugal or ACP), the average price for diesel could reach 2.05 euros per litre, while petrol may average 1.99 euros. These forecasts account for recent adjustments to the tax on petroleum products (Imposto sobre os Produtos Petrolíferos or ISP).

Update: Government increases fuel tax discount to mitigate price hikes

In response to the expected price surge, the government has further increased the discount on the ISP. The subsidy for diesel will rise by an additional 1.5 cents, while the petrol subsidy increases by 0.6 cents.

The Portuguese Communist Party (Partido Comunista Português or PCP) announced plans to propose a 50-euro general increase for all pensions starting July 1st. Unlike one-off supplements previously granted by the government, the party argues this measure would consolidate the increase into the permanent pension value. The government has historically resisted permanent hikes to avoid increasing long-term Social Security expenditure.

Data from the National Statistics Institute (Instituto Nacional de Estatística or INE) shows that nearly 270,000 taxpayers in Portugal held two or more jobs in 2025, the highest figure on record. Additionally, statistics indicate that Portugal has the fifth-highest average weekly working hours in the European Union, with 19.5% of the workforce regularly working on weekends.

Fuel prices are set to increase significantly starting next week, with diesel rising by approximately 10 cents per litre and 95-octane petrol by 6.5 cents. The government has responded to the expected surge by approving an extraordinary reduction in the tax on petroleum products (Imposto sobre os Produtos Petrolíferos or ISP) to help mitigate the impact on consumers.

Socialist Party (PS) Secretary-General José Luís Carneiro has accused Prime Minister Luís Montenegro of being disconnected from the reality of rising living costs. Carneiro argued that recent budget execution data should serve as a warning sign for the government, despite the Prime Minister's claims that there is no cause for alarm.

Fuel prices in Portugal are expected to increase significantly starting Monday due to the ongoing conflict in the Middle East driving up global oil costs. Diesel prices are projected to climb by 9.5 cents per liter, while gasoline is expected to rise by 6 cents, pushing diesel costs back above the 2-euro-per-liter mark.

Prime Minister Luís Montenegro stated it is too early to approve a permanent pension increase, though he remains open to one-off supplements if public finances allow. During a parliamentary debate, the Socialist Party (Partido Socialista or PS) leader José Luís Carneiro urged the government to prioritize those on minimum pensions facing high living costs.

The average annual salary in Portugal reached 24,800 euros in 2024, a 7% increase from the previous year. Despite this growth, the Business Roundtable Portugal association reports that Portuguese earnings remain 38% lower than the European Union average of 39,800 euros.

A new World Bank report projects that energy prices will increase by 23.6% in 2026 due to ongoing conflict in the Middle East. This rise is expected to be the highest since the start of the war in Ukraine, with significant impacts also anticipated for fertilizer and metal costs.

The Bank of Portugal (Banco de Portugal or BdP) is advising customers to contact their banks if they face difficulties resuming home loan payments. The moratorium, which allowed for a temporary suspension of payments for families affected by severe weather, officially ends on April 28.

Fuel prices will shift starting next week, with petrol expected to rise by 2.5 to 3.5 cents per litre. Conversely, diesel prices are set to decrease, with estimates ranging from a 0.9-cent drop to a 4-cent reduction according to the Automóvel Club de Portugal (Automóvel Club de Portugal or ACP). These fluctuations reflect market trends and recent government adjustments to fuel discounts.

Electricity prices in the Iberian market are expected to remain stable due to the integration of renewable energy sources, particularly hydroelectric power. Pedro Amaral Jorge, president of the Iberian Electricity Market (Mercado Ibérico de Eletricidade or MIBEL), stated that the focus is on increasing price predictability for consumers. He also argued against taxing extraordinary corporate profits.

Fuel prices will fluctuate starting Monday, April 27, with diesel expected to decrease by 3.2 cents per litre following a government tax discount adjustment. Petrol prices are forecast to rise by 2.5 cents per litre. These figures are estimates from the Automobile Club of Portugal (Automóvel Club de Portugal or ACP) and may vary by location and gas station.

Update: Government reduces diesel tax discount

The government has officially decided to reduce the planned tax discount on diesel. Consequently, the price per litre will drop by 3.2 cents instead of the originally anticipated four-cent decrease. The tax discount for petrol remains unchanged, confirming the expected 2.5-cent increase per litre.

Municipalities affected by recent severe weather have requested that the government extend economic and employment support measures for an additional 60 days. A formal request has been sent to the Minister of Finance to keep these protections in place until the end of June.

The trade union federation CGTP is demanding urgent government intervention to control the prices of essential goods and fuel. The union reports that the cost of living has risen significantly, placing a heavy burden on workers and pensioners.

The cost of an essential food basket containing 63 products has reached a new record of 260.89 euros, according to the consumer protection organization Deco Proteste. This marks the seventh consecutive week of price increases, with the basket becoming 1.37 euros more expensive than the previous week. The current price is the highest recorded since the organization began monitoring these costs in January 2022.

The state-owned company Infraestruturas de Portugal (Infraestruturas de Portugal or IP) recorded a net profit of 135 million euros in 2025, the highest value since its creation in 2015. This 8.8% increase occurred despite a reduction in toll revenue following the end of certain toll-free road schemes (SCUT). Meanwhile, the government has selected Paulo Carmona, the current director-general of the Directorate-General for Energy and Geology (Direção-Geral de Energia e Geologia or DGEG), to serve as the next president of the company.

Portugal's year-on-year inflation reached 2.7% in March 2026, up from 2.1% in February, primarily driven by a 5.8% surge in energy prices. This spike, linked to geopolitical tensions in the Middle East, accounts for over half of the total inflation increase. While the broader Eurozone labour market is expected to remain resilient, the rising cost of living remains a significant concern for the national economy.

The government is reducing the extraordinary tax discount on diesel by 1.5 cents per liter, while maintaining the current discount for unleaded petrol. This adjustment, published in the Diário da República, follows an expected significant decrease in diesel prices for the coming week. The move aims to balance fuel costs for consumers while managing the temporary tax relief measures.

The latest DN/Aximage Barometer shows the Socialist Party (Partido Socialista or PS) leading voting intentions at 30.6%, followed by the PSD-CDS coalition and Chega. The poll highlights growing public dissatisfaction with the government, which received a 54% negative rating. Meanwhile, the Left Bloc (Bloco de Esquerda or BE) has criticized the Social Democratic Party (Partido Social Democrata or PSD) for supporting Chega candidates for parliamentary oversight bodies.

The Portuguese Association of Insurers (APS) announced that insurance companies have paid 359 million euros in compensation for damages caused by severe storms in January and February. Total covered damages are projected to reach 1.086 billion euros, with over 100,000 claims already processed or partially settled. The storms caused significant destruction across the central zone of the country.

The cost of an essential basket of 63 products has reached a new record of 259.52 euros, according to data from the consumer protection organization Deco PROteste. This marks the sixth consecutive week of price increases, driven largely by rising energy costs.

Global oil prices have climbed above 100 dollars per barrel following a US-led blockade of the Strait of Hormuz. The move, announced by Donald Trump, aims to restrict Iranian oil revenues amid collapsing diplomatic negotiations. The situation has triggered significant market uncertainty and increased costs for energy and consumer goods in Portugal.

The cost of an essential basket of 63 food products, monitored by the consumer protection association Deco Proteste, has reached a record high of 257.95 euros. This represents an increase of 2.95 euros in just one week, with prices for items like pasta showing significant spikes. The current cost is 37.42% higher than it was four years ago.