10.2% Inflation headache

Rising prices over the next few months could put a spanner in the works for the Portuguese government’s forecast of 7.4% for 2022.

The National Statistics Institute (INE) has issued a back-of-the-envelope estimate for October which points to an inflation rate of 10.2% – +0.9 percentage points on September.
If the Month-on-Month evolution is does not increase in November and December, the average annual inflation rate will be 7.8% for 2022. In January, the Consumer Price Index variation was 3.4%, a number that has gone up ever since with the exception of August when the inflation rate fell back to 8.9%.
For the Government to achieve its target for 2022, inflation will have to go down by the end of the year. If inflation for November and December goes up by 0.9 percentage points, then the average annual rate for 2022 could hit 8.1%.
The Government’s forecast in the State Budget for 2023, which was delivered to Parliament on 10 October, is for an inflation rate of 7.4% this year and 4% in 2023.
Forecasts from the Council of Public Finances were 7.7% for 2022 and 5.1% for 2023. The IMF suggests 7.9% for 2022 and 4.7% in 2023.