Euro zone inflation jumps to 3.8% as energy and food costs surge
The euro zone inflation rate is expected to reach 3.8% in September, according to a flash estimate from Eurostat, the European Union's statistics office. The figure marks a sharp acceleration from the 3.2% recorded in August and represents the highest level in three years. The increase has been driven primarily by energy prices, which surged 18.8% in September, compared with a 14.3% rise the previous month.
In Portugal, the impact has been immediate. The national inflation rate accelerated to 3.6% in September, up from 3.3% in August. Energy costs rose 15.4% in Portugal last month, compared with 12.2% in August, according to data cited in relation to the broader European trend. Portuguese consumers are seeing the effects in supermarkets and at fuel pumps: the tomato Index monitored by DECO Proteste showed an 18% weekly rise in mid-September, while arroz carolino — a staple rice — has become 30% more expensive since January.
Supply disruptions hit essential goods
The Food and Agriculture Organization of the United Nations reported that its Food Price Index averaged 136.0 points in September, a 5.8% increase from September 2025 and 1.5% higher than August. Máximo Torero, the FAO's chief economist, said the world is witnessing a "persistent and increasingly widespread rise in the prices of basic products."
The FAO attributed the surge to disruptions in the Strait of Hormuz and the Black Sea, combined with climate impacts. Global wheat prices rose 6.3% month-on-month due to logistical constraints in the Black Sea region, while maize prices increased 5.6% amid concerns over yields in the United States and reduced export availability from Brazil. Sugar prices jumped 6.1% in September, driven by expectations of tighter global supply in the 2026/2027 season.
The Organisation for Economic Co-operation and Development confirmed the broader trend. Inflation rose in 23 of the OECD's 38 member countries in August, with OEDE-wide inflation accelerating to 4.3%. The OECD's energy inflation measure soared to 13.6% in August, up from 11.6% in July. The G20 annual inflation rate increased to 4.1% in August, from 3.9% in July.
IMF warns of lasting blow to household purchasing power
The International Monetary Fund cautioned that the current crisis represents more than a temporary price spike. In a blog post accompanying a new report, the IMF stated that consumers face a "lasting deterioration in financial accessibility to basic necessities", particularly food and energy.
The Fund noted that the Covid-19 pandemic disrupted supply chains, while the war in Ukraine affected food and hydrocarbon production, and the conflict in the Middle East drove up energy and fertilizer prices. The IMF estimates that the war in Iran, which began in February, will push global inflation to 4.7% this year, up from 4.1% in 2025.
Lower-income households bear the brunt, as essentials account for a larger share of their monthly expenditure. The IMF assessed that this trajectory has a "considerable" impact on worsening poverty and income inequality. Wages worldwide have struggled to keep pace with the rising cost of living.
Governments urged to target aid, not subsidies
The IMF recommended that countries prioritize "targeted and temporary aid transfers" to vulnerable households and viable businesses under pressure, rather than blanket subsidies. However, the institution acknowledged that some nations lack the fiscal space to implement such measures due to high debt levels.
For Portugal and other EU countries, the IMF advises reducing tax exemptions, reforming pension systems to contain aging-related spending pressures, and addressing housing market imbalances. The Fund also recommends structural reforms to boost productivity, including increasing labor market flexibility and improving SME access to financing.
The IMF warned that the influx of EU funds in Portugal could exacerbate inflationary pressures from rising energy prices, potentially requiring tighter fiscal policy. Final euro zone inflation data for September is scheduled for release by Eurostat on 16 October.
What this means for households in Portugal
For a typical Portuguese family, the numbers translate into concrete pressure on monthly budgets. With energy inflation at 15.4% and food prices climbing, essential expenses are consuming a growing portion of income. The rise in key staples like rice and olive oil — up sharply since the start of the year — hits lower-income households hardest, as these represent a larger fraction of their spending.
The IMF's guidance suggests that further government support, if it comes, will likely be targeted at the most vulnerable rather than applied broadly. In practice, this means means-tested payments or vouchers rather than general fuel or food subsidies. With public debt still elevated, the government's room for manoeuvre remains constrained.
