Portugal to give one-off subsidy to poorest families amid soaring inflation

LISBON (Reuters) – Portugal’s government approved a one-off subsidy of 240 euros for over a million poor families, whose purchasing power is being hard hit by soaring inflation, Labour Minister Ana Mendes Godinho said on Thursday.

The benefit, which will be given to families whose members receive the minimum pension or earn the minimum wage, will be paid by Dec. 31, Mendes Godinho said.

It will cost the state coffers 249 million euros ($266.33 million) and adds to a package previously worth 2.4 billion euros already announced in September to help families cope with soaring inflation and energy prices.

“We have to guarantee adequate responses to each situation. The most vulnerable families are the most affected by inflation and it is critical that they receive this subsidy,” she told reporters.

The opposition has criticized the government for taking in a windfall of additional tax revenues amid solid economic growth and high inflation without sharing the gains with families and businesses, saying it is too focused on cutting the fiscal deficit.

Consumers prices rose 9.9% year-on-year in November, a three-decade high, more than double the 4% the government had forecast in the 2022 budget.

Finance Minister Fernando Medina told Reuters last month that Portugal’s economy could grow at least 6.7% this year, faster than its 6.5% forecast, helping the country further slash one of Europe’s heaviest public debt burdens and its deficit.

Mendes Godinho said the government also hiked the national minimum wage by 7.8% to 760 euros ($806.82) from Jan. 1 as agreed with employers and the country’s second-largest labour union UGT.

According to data from Ministry of Labour, around 900,000 employees earn the minimum wage, which is currently the lowest in western Europe. Portugal has a population of just over 10 million.

($1 = 0.9349 euros)

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