Portugal inflation rises to 3.6% in August

The latest Eurostat data showed Portugal’s rate accelerating from 3.1% in July and 2.5% a year earlier, leaving it 0.4 percentage points above both the euro-zone and EU average, which each stood at 3.2%. Portugal was the ninth-highest inflation country in the bloc, behind Romania at 6.3%, Lithuania at 5.6% and Cyprus at 5.2%, and ahead of larger economies such as Germany at 2.9% and France at 2.6%.

What makes the reading more important is that the pressure is not broad-based in a healthy way. Energy was the main accelerant, with prices up 14.3% year on year in the euro zone, while services still contributed the most to overall inflation. That is exactly the kind of mix central bankers worry about: one part driven by volatile fuel costs, another tied to wages and domestic demand. Strip out energy and inflation in the euro zone was 2.1%, closer to the European Central Bank’s target, but not comfortably there.

For Portugal, the message is straightforward. Inflation has re-accelerated since spring, moving from 2.7% in March to 3.6% in August after several months stuck around 3.1%. That makes it harder for consumer purchasing power to recover and complicates life for businesses that rely on steady domestic demand, from retailers and restaurants to travel and utilities.

For long-term investors, the bigger takeaway is that inflation risk remains a core portfolio variable, not a solved problem. Higher prices can support nominal revenues for some companies, but they also squeeze margins, raise wage pressure and can delay central-bank easing. In that kind of environment, investors tend to favor businesses with pricing power, strong free cash flow and low debt, while more rate-sensitive names can remain volatile.

The good news is that Europe is still far from the inflation shock of 2022. But Portugal’s position near the top of the EU rankings is a reminder that the last mile of disinflation is usually the hardest. That makes patience, diversification and a focus on durable businesses more important than trying to trade every monthly data point.