Modern Food Retail
In 2023, food retail was strongly affected by high inflation, which reached 20% in the first quarter. This situation led to social discontent and response measures by the government, with the temporary elimination of VAT on a basket of essential products until the end of the year.
The minimum wage increased 7.8% to 760 euros in January 2023, mitigating the effects of 10% food inflation, after the 13% increase recorded in 2022. In January 2024, the national minimum wage was increased to 820 euros.
Food retail grew in 2023, but at a lower rate than food inflation, which remained in the double digits, although it fell substantially throughout the year, closing at 1.7%.
PORTUGAL - Food retail sales index & food inflation
Current prices
The food retail market remained highly competitive, with more than 80 new stores opened by the major operators by the end of 2023 and a significant acquisition by an international operator.
In 2024, the context should improve for families, albeit only slightly, given the expected wage increases, the significant drop in inflation and a reduction in interest rates, which is expected mainly in the second half of the year (with the knock-on effect on mortgage loans felt only in 2025), as well as the expectation that employment levels will be maintained. Salaries above the national minimum wage and pensions are expected to increase by a smaller percentage but should still enable a recovery of some purchasing power lost in recent years.
Wholesale Market
According to Nielsen data1, the cash & carry segment grew 15.9% compared to the previous year, recording a sales volume of 2.2 billion euros.
The HoReCa channel recovered significantly in the first half of the year, but growth slowed down in the second half, reflecting lower consumer purchasing power. It was, however, a very positive year for tourism in Portugal, which had a positive impact on cash & carry and, to a lesser extent, traditional food retail.
1 Nielsen – September 2023
Sources: Banco de Portugal Economic Bulletins; Portuguese Ministry of Finance; Portuguese Statistics Office (INE); National Bank of Poland Economic Bulletins; Central Statistical Office (GUS); Banco de la República (Colombian Central Bank); Colombia National Administrative Department of Statistics (DANE); Fedesarrollo; Nielsen and BMI; Future Minds, Fitch BMI, Mordor Intelligience, iAlimentar, America Retail, Valora Analitik.
Note: All macroeconomic data presented in this subchapter are based on the latest available information at the closing date of this report.