Portuguese official inflation spikes on tax rise

Portuguese consumer price inflation picked up sharply in October, jumping to 4.2 percent from 3.6 percent in September, driven largely by higher taxes on energy, official data showed Friday.

The INE statistics agency said the spike in the 12-month inflation rate reflected a return to the standard 23 percent Value Added Tax on electricity and natural gas from the reduced 6.0 percent rate.

The VAT sales tax rise was made as part of government efforts to increase revenue and cut costs under May’s 78-billion-euro debt rescue package agreed with the EU and International Monetary Fund.

INE said that if the measure was excluded from the figures, consumer prices rose 2.5 percent in October compared with October 2010.

Compared with September, when prices rose 0.8 percent on a monthly basis, October showed an increase of 1.1 percent.