Consumer Prices Rose 2.7% in March as Energy and Food Inflation Widened to Levels Not Seen Since Last August

Portugal's annual inflation rate held steady at 2.7 per cent in March 2026, matching the revised February figure and confirming the highest reading since August 2025, according to final data released by Statistics Portugal (INE). The numbers underscore how the ongoing conflict in the Middle East continues to ripple through the Portuguese economy, hitting consumers at the petrol pump and the supermarket checkout alike.

Energy Leads the Charge

The headline figure was driven primarily by a 5.7 per cent year-on-year surge in energy prices — the first increase in six months and a sharp reversal from the disinflationary trend that had given households some relief through late 2025. With Brent crude trading above USD 90 per barrel for most of March amid disruption to shipping routes and supply uncertainty linked to the Iran conflict, Portuguese fuel prices have followed European benchmarks higher.

Diesel, which broke through the EUR 2-per-litre barrier earlier this month, remains the most visible symptom of the energy shock for Portuguese drivers and hauliers. The government's decision to temporarily suspend part of the fuel tax (ISP) in February has cushioned the blow, but analysts say the measure is fiscally unsustainable beyond the summer if prices remain elevated.

Food Inflation Eases Slightly but Remains Painful

Unprocessed food prices rose 6.4 per cent year-on-year, a marginal improvement from 6.7 per cent in February but still well above the overall inflation rate. Fresh fruit, vegetables, and olive oil — staples of the Portuguese diet — continue to reflect both global commodity pressures and domestic drought conditions that reduced the 2025 harvest.

Processed food inflation, meanwhile, moved in the opposite direction, accelerating to 1.4 per cent from 0.9 per cent in February. Industry groups have pointed to rising packaging and transport costs as the main culprits, with some producers warning that further price adjustments are in the pipeline for the second quarter.

Core Inflation Edges Higher

Perhaps most concerning for policymakers is the uptick in core inflation — the measure that strips out volatile energy and unprocessed food — which edged up to 2.0 per cent from 1.9 per cent. Services inflation held firm at 3.4 per cent, suggesting that wage growth and domestic demand are now adding to price pressures independently of the external energy shock.

The European Central Bank, which held rates steady at its March meeting, has signalled that it will not resume cutting until it sees sustained progress toward the 2 per cent target across the eurozone. Portugal's numbers are unlikely to change that calculus, but they add to the evidence that the last mile of disinflation is proving stubborn.

What It Means for Households

For Portuguese families already squeezed by the cost-of-living crisis — reflected in the EUR 40 million drop in lottery and scratch-card sales reported this week — the March data offers little comfort. Real wages have been growing, but the gap between wage increases and food-plus-energy inflation means purchasing power gains are unevenly distributed.

The government has pointed to its IRS tax relief measures and fuel duty suspension as evidence of its commitment to protecting households. Opposition parties, whose cost-of-living resolution was voted down in parliament on Saturday, argue that the response remains insufficient.

With the CGTP's national strike scheduled for 17 April and unions citing the rising cost of living as a central grievance, the inflation data is likely to sharpen the political debate in the weeks ahead.