Prices rise at different rates. Restaurants and hotels in Lisbon are twice as expensive as in Alentejo and Algarve – Observador

You have free access to all Observer articles as a subscriber.

If you usually eat out or stay at a hotel, you’ve probably noticed that inflation there is already notorious. On average (and based on a sample collected by INE), hotel and restaurant prices were 9.93% more expensive in April this year compared to the same period last year. This means that food or accommodation, which cost 20 euros in April 2021, has become more expensive. almost two euros a year later, the national average. But this increase was far from uniform throughout the country: for the same food or the same accommodation in Lisbon and Vale do Tejo, he began to pay more. 2.5 euroand in Alentejo there was a rise 1.24 euros and in the Algarve 1.36 euros.

In April, INE-calculated inflation hit 7.2%, the highest in 29 years, after already rising 5.3% in March. The war in Ukraine is playing a role in this escalation, exacerbating the rise in prices for energy, raw materials and food, but prices have already been rising since last year, also due to the pandemic, which contributes to supply chain disruptions.

April growth affected most sectors (with the exception of clothing and footwear due to the effect of promotions). And in all regions. It is in the North that inflation grew the most year-on-year: it increased by 7.56%, above the Lisbon metropolitan area (7.23%), Center (7.15%), Algarve (7.06%), Alentejo (6. 67%) and the Autonomous Region of Madeira (6.14%). With the exception of the Azores (where inflation was 4.06%), there are no significant differences in these figures from the outset.


But it is when looking at certain product categories that one can see marked regional differences: this is the case for restaurants and hotels, where these differences can almost double when comparing Lisbon and Vale do Tejo with the Alentejo or the Algarve.

There are also discrepancies in the category “food and non-alcoholic beverages”, where inflation ranges from 4.91% in the Azores to 11.82% in the Algarve. In the north it is 11.09%, in Lisbon 10.38%, in the center 9.63%, in Alentejo 8.74% and in Madeira 7.94%. Another example: in “household items, household appliances and house maintenance” inflation ranges from 0.53% in the Azores to 7.72% in the North.

Inflation in Portugal reached 7.2% in April, the highest in 29 years.

But how does INE calculate inflation values? From the consumer price index. To determine the national index, 140 INE interviewers collect about 120,000 prices from 12,500 establishments large and small located in 45 locations across the country, according to information provided by the institute. The basket of selected goods and services includes more than 1300 items (prices can be collected for the same product in different establishments).

Inflation is already eating away at purchasing power. Shopping cart in Portugal has become the smallest in the last four years

In addition to on-site pickup, there is also online booking for a “significant number” of tour packages, air travel and hotel prices. And there are situations in which there is a simultaneous collection in person and online: for “some large chains of furniture, mobile phones, clothes and shoes.” In the case of prices for fuel, medicines and rent, administrative data sources are used.

But not all categories of goods and services carry the same weight in the calculation of the consumer price index. Each category is weighted according to its share of household expenditure. The structure of these expenditures is calculated on the basis of the “Family Expenditure Survey” conducted by the NIS every five years, as well as on the basis of field data collection, including through national accounts and censuses.

April inflation varies widely across categories. The most developed sector is the transport sector (13.09%), as well as food and non-alcoholic beverages (10.25%), housing, water, electricity, gas and other fuels (10.19%), restaurants and hospitality (9, 93%). %). Only in clothing and footwear there was a decrease (-0.72%), which is explained by the seasonality of the collections.

In restaurants and hotels, inflation ranges from 6.20% in Alentejo to 12.51% in Lisbon and Vale do Tejo. INE explains to the Observer that this sector contributes 8.2% to headline inflation. Every month, the institute collects online and in person about 6,200 price lists in seven regions of the country. “All types of food and establishments are taken into account”: for example, meals, snacks, pastries and drinks, including takeaway and home delivery, as well as hotel establishments and local accommodation scattered around the country, “with various typologies representative of household spending “.

The association representing the catering and accommodation sector, AHRESP, justifies the 9.93% increase in prices in this sector by rising costs that “crush” companies’ operating margins. But that doesn’t explain the divergence between Lisbon and the rest of the country.

For the Observer, Ana Jacinto, general secretary of AHRESP, speaks in national terms. He says the “inflationary pressure” being experienced in Portugal is “causing enormous pressure” on companies in the sector and that “a sharp increase in spending” even “undermines the sustainability of the business.”

“The vast majority of food service businesses, similar companies and tourist accommodation companies have already experienced this significant increase in operating costs, mainly for food (oil, meat, country, etc.) and energy (electricity, gas and fuel),” he says . Costs that cause companies to see their profits “crushed”.

Ana Jacinto highlights, for example, that the category of food and non-alcoholic beverages increased by 10.25%, “which has a direct and very dramatic impact” on economic activity. Companies, he assures, tried to “postpone” the decision to raise prices to the buyer, but “ability to absorb costs is not unlimited“. In addition, many companies have not yet recovered from the shock of the pandemic.

“After two consecutive years of the pandemic crisis, when the financial structures of companies are completely unstable, with depleted treasury values, our micro and small companies can’t support selling prices given the significant increase in its operating expenses,” he points out.

In addition, he recalls that demand has increased – it is at levels “very close” to pre-pandemic levels – which is spurring prices up. “We cannot forget that the economic situation in April 2022 is completely different from the situation in April 2021, when there were still strong restrictions on our tourism and leisure, and demand was small, factors affecting the prices charged by restaurants and hotels” , – he said. adds.

Leave a Comment