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Portugal To Extend Subsidy To Help Poorest With Food Inflation

By Steve Wynne-Jones
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Portugal To Extend Subsidy To Help Poorest With Food Inflation

Portugal will extend until September a subsidy of €60 a month to help the poorest families cope with food inflation, Prime Minister Antonio Costa has said.

Speaking in parliament, Costa said the three-month extension to the subsidy launched in April would be approved on Thursday and would benefit 10% of the country's population of 10 million people.

Around 900,000 Portuguese take home the national minimum wage of €705 per month, the lowest in western Europe.

Consumer Prices

Portuguese consumer prices spiked 8% year-on-year in May, at their fastest pace since February, 1993, with energy prices rising 27.2% and unprocessed food increasing 11.7%.

"We are trying to control inflation in the way that we can and must do: preventing price increases from contaminating the rest of the economy, namely by controlling energy costs," Costa said.

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In April, Portugal reduced a special tax levied on fuel, offsetting around half the increase in the price of diesel that has occurred since October 2021 and 74% of the gasoline price rise.

Earlier this year, certain products were rationed in Portuguese supermarkets, due to the Ukraine conflict impacting suppliers.

Fuel Costs

Portugal and Spain a week ago began to subsidise fossil fuel power plants' generation costs, under a scheme designed to lower electricity prices for consumers and industry. The mechanism is expected to cost Portugal €2.1 billion.

The government is also paying 30% of the increase in gas costs energy-intensive industry such as cement and steel is experiencing compared to 2021. Agricultural companies are also exempt from paying VAT on fertilisers and feed.

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Consumers, companies and industry groups say the measures are not enough to help them cope with the spike in prices.

Read More: Mercadona Planning Ten Store Openings In Portugal For 2022

News by Reuters, edited by ESM – your source for the latest A-Brands news. Click subscribe to sign up to ESM: European Supermarket Magazine.

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