MNI BRIEF: Portuguese Central Bank Downgrades Inflation View

Portugal’s central bank downgraded its forecast for the country’s 2024 inflation on Friday, saying in its Economic Bulletin that it expects it to fall to 2.9%, 0.7 percentage points less than it had foreseen in October following the reversal of adverse supply shocks, and the effects of monetary tightening on demand.

After reaching 2.6% in the third quarter, Portuguese inflation could rise during the first months of 2024 when electricity tariffs are due to rise and base effects on food prices ease. Inflation should close 2023 at 5.3% and will be average 2% in both 2025 and 2026, the central bank said. (See MNI ECB WATCH: Lagarde Says Cuts Not Discussed As Rates Held)

Core inflation will also see a significant drop in 2024 to 2.3% --versus the 2.9% expected in October—and will remain stable in 2025 and 2026 at 2.1%. Core will end this year at 5.4%, two tenths less than expected in October. (See MNI SOURCES: ECB Needs Sub-3% Core Inflation To Consider Cuts)