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CPI Portugal final data – February CPI: 2.1%YoY (Core 1.9%) in line with preliminary data, o/w - Services inflation 3.38% and Goods: 1.1%. The structural trend remains in place, Services pushing upwards prices, while Goods remain stable, around 1%. A strong economy in terms of domestic demand will tend to pressure upwards prices on Services, fortunately Goods are mainly imported and not linked to domestic demand. Finally, the Middle East conflict if goes on for a long time, should pressure upwards prices, however, is not inflation in the sense that is not a sustain broad based increase in prices. So, I will be surprised if monetary authorities increase interest rates to curb inflation.         

The Portuguese Statistic Institute has just released, February’s CPI final data and its subcomponents.  

We would highlight the following:

• CPI: +2.10%YoY; in line with preliminary data; +7bp sequentially; compares with the 12MMA (12 months moving average): 2.3% and 3MMA of +2.1%;
• Core CPI: +1.94%YoY; compares with the 12MMA: +2.1% and 3MMA +1.9%;

• Services: +3.38%YoY vs. 12MMA: +3.8% and 3MMA: +3.5%;
• Goods: +1.11%YoY vs. 12MMA: 1.1% and 3MMA: +1.0%;    
• Energy: -2.17%YoY vs. 12MMA: -0.9% and 3MMA: -2.3%;

• Food and Non-alcoholic Bev: +3.6%YoY vs. 12MMA: +3.1% and 3MMA: +3.4%;
• Clothing and Footwear: -1.89%YoY vs. 12MMA: -1.6% and 3MMA: -1.8%;
• Household Equipment: -2.41%YoY vs. 12MMA: -1.6% and 3MMA: -2.7%;  
• Restaurant/Meals: +6.58%YoY vs. 12MMA: +6.4+% and 3MMA: +6.7%;
• Postal Services: +5.80%YoY vs. 12MMA: +6.1% and 3MMA: 6.0%;
• Telecommunications (bundle services) -0.88% YoY vs. 12MMA: -1.4% and 3MMA: -1.4%;
• Rents +5.19%YoY vs. 12MMA: +5.1% and 3MMA: 5.1%.

Our comments: final inflation data in February, 2.1%YoY and Core: 1.94%; in line with preliminary data and consolidating close to moving averages. Meanwhile, Services at 3.38% remains below moving averages, while Goods at 1.1% is in line with moving averages. The structural trend remains in place, Services pushing upwards average prices, while Goods are doing the opposite. The current instability in the Middle East should impact prices, namely if it goes on for a long time, however, is a discretionary change on prices, not inflation, as a sustain broad based increase in prices, which means central banks should remain inactive.