Inflation Rate Drops to 1.9% in May 2025, Lowest Since October 2024
Annual Consumer Price Index report shows a significant decline, driven by reduced leisure and cultural prices.
The annual variation of the Consumer Price Index (CPI) for May 2025 has been recorded at 1.9%, a decline of three tenths from April, according to preliminary data released by the National Institute of Statistics (INE).
This figure represents the lowest inflation rate since October 2024, primarily influenced by a decrease in prices within the leisure and cultural sectors compared to the price increase observed in May 2024. Additionally, transportation costs have diminished more significantly than in May of the previous year, while the increase in electricity prices has been less pronounced than in the same month last year.
With the moderation of the annual CPI in the fifth month of the year, inflation has now recorded three consecutive months of decline.
The May 2025 figure is also 1.7 percentage points lower than the variation reported for the same month in the prior year and remains below the European Central Bank's reference level of 2%.
This trend mirrors a similar period between September and October of the previous year, when inflation briefly fell below the 2% threshold before rising again to around 3%.
Further, the underlying inflation rate, which excludes energy and fresh food prices, has also decreased by three tenths, landing at 2.1%, the lowest level since December 2021. This drop signifies a return to a moderation trajectory following a four-tenth increase experienced in April.
While leisure and culture have notably contributed to the CPI decline, they are among the groups that have seen significant price increases during the ongoing pricing crisis.
For instance, hotel prices have surged by 21% over the past three years, and have nearly risen by 40% compared to the summer before the pandemic.
Another group reflecting substantial price increases in recent years is food, which, comparing data from April 2025 to 2021, has increased by 32%, followed by restaurant prices which rose by 23.8%.
The latest forecast consensus, as noted in the May Funcas Panel, suggests that inflation will 'bottom out' around mid-year, with expectations of a slight increase thereafter.
Overall, an annual average inflation rate of 2.5% is anticipated for the general index and 2.3% for the underlying index.
Should these projections hold, they would mark the lowest inflation rates since 2020, a year which recorded a price decline of 0.3%.
In 2024, the average general inflation rate was noted at 2.8%.
This figure represents the lowest inflation rate since October 2024, primarily influenced by a decrease in prices within the leisure and cultural sectors compared to the price increase observed in May 2024. Additionally, transportation costs have diminished more significantly than in May of the previous year, while the increase in electricity prices has been less pronounced than in the same month last year.
With the moderation of the annual CPI in the fifth month of the year, inflation has now recorded three consecutive months of decline.
The May 2025 figure is also 1.7 percentage points lower than the variation reported for the same month in the prior year and remains below the European Central Bank's reference level of 2%.
This trend mirrors a similar period between September and October of the previous year, when inflation briefly fell below the 2% threshold before rising again to around 3%.
Further, the underlying inflation rate, which excludes energy and fresh food prices, has also decreased by three tenths, landing at 2.1%, the lowest level since December 2021. This drop signifies a return to a moderation trajectory following a four-tenth increase experienced in April.
While leisure and culture have notably contributed to the CPI decline, they are among the groups that have seen significant price increases during the ongoing pricing crisis.
For instance, hotel prices have surged by 21% over the past three years, and have nearly risen by 40% compared to the summer before the pandemic.
Another group reflecting substantial price increases in recent years is food, which, comparing data from April 2025 to 2021, has increased by 32%, followed by restaurant prices which rose by 23.8%.
The latest forecast consensus, as noted in the May Funcas Panel, suggests that inflation will 'bottom out' around mid-year, with expectations of a slight increase thereafter.
Overall, an annual average inflation rate of 2.5% is anticipated for the general index and 2.3% for the underlying index.
Should these projections hold, they would mark the lowest inflation rates since 2020, a year which recorded a price decline of 0.3%.
In 2024, the average general inflation rate was noted at 2.8%.
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