Finance minister rejects fears of rising inflation, insists on 0.9% public sector pay rise

The finance minister on Wednesday highlighted that Portugal is one of the EU countries with the lowest inflation, stressing that the increase is considered temporary, and reiterated wage increases of 0.9% in the public sector.

“Portugal remains one of the countries with the lowest inflation rate,” in line with the government’s forecasts, the finance minister said, stressing that this rise in the inflation rate was considered by central banks and also by European finance ministers to be “of a temporary nature,” and that there was consensus that it would start to be reduced from next year.

João Leão was speaking to journalists on the sidelines of the annual summit of the Insurance and Pension Funds Supervisory Authority (ASF), held today in Lisbon, where he was asked about the fact that the data released today by Eurostat show that the annual inflation rate rose in October for the fourth consecutive month in the euro zone and the European Union (EU), exceeding the 4% barrier.

In the eurozone, the inflation rate increased to 4.1% in October, up from -0.3% in the same month of 2020 and 3.4% in September.

In the EU, inflation reached 4.4%, which compares with 0.3% year-on-year and 3.6% in September, with the indicator increasing in all member states.

According to the European statistics office, among the 27 member states, the lowest annual inflation rates were recorded in October in Malta (1.4%), Portugal (1.8%), Finland and Greece (2.8% each).

Underpinning the situation in Portugal, he said, were measures taken to stabilise prices in the electricity sector, a situation that “did not happen” in other countries.

Asked whether in the current context it made sense for the salary update for civil servants to be 0.9 percent, the minister said that average inflation over the last 12 months – which serves as a reference for increases – is expected to be close to that figure, taking into account the data known up to October.

“We will now check what the inflation [average of the last 12 months known in December] is to make this update, but at the moment the estimate that exists and what we know until October is 0.9%, and the numbers point to it being 0.9%,” he said.

On the need for measures to be taken to contain the rise in new cases of Covid-19, the minister stressed the need to act proactively, but recalled that, given the pattern of evolution and the vaccination rate of Portugal, he does not anticipate, at least for now, that measures have to be taken that significantly affect economic activity or the lives of the Portuguese.