Eighteen shops close per day as consumption falls
Restaurants, hairdressers, newsagents and boutiques are all losing clients.
The cost of living crisis is obliging Portuguese to ‘cutback’ and change their spending habits, writes Expresso today.
This translates into people buying much less, cancelling subscriptions, turning off lights, taking shorter showers.
According to an inquiry by consumer watchdog DECO Proteste, reduction in consumption is now threatening several sectors, provoking business closures, particularly restaurants and traditional commerce.
Data compiled by INE statistics institute shows that in the three months between November 2022 and January 2023 inclusive, 1639 shops closed their doors for good. This represents twice the number of new businesses that opened, and more than twice the closures registered in the same period 12 months previously.
João Vieira Lopes, president of the Confederation of Portuguese Commerce and Services, explains that most affected are clothes shops, newsagents/ tobacconists, minimarkets and corner shops. Restaurants too are struggling as habitual customers ‘cut back on spending’ by simply no longer eating out.
“Various other sectors, like hairdressers, are losing clients”, says Expresso.
“The tendency is worrying”, João Vieira Lopes admits, stressing the next reflection of this reality will be rising unemployment. Indeed, he “fears a progressive worsening of the situation in coming months”, says Expresso.
Already, the situation within family units is “alarming”, the paper continues.
“According to DECO Proteste, 44% have difficulties in pay household costs (rent/ mortgage/ utilities) and putting food on the table, and 8% are in imminent risk of not being able to cover these expenses. Food is one of the areas where prices have skyrocketed in the last year, with inflation reaching 21.1%” (another issue on its own). Just this week, the price of a basic hamper of goods increased by another €4, reaching €235, a new record: Portuguese are now having to spend €51 more than before the war in Ukraine” for these basic goods, Expresso adds.
There is more bad news: mortgage rates have been revised upwards again this week – meaning increases for some borrowers of up to €300 on previous habitual monthly instalments.
“To face the rising cost of living, 27% of Portuguese have had to look for money in their savings; but these are running out, and many do not even have them. According to DECO, 75% guarantee that it is impossible, or almost impossible, to save money at the end of the month, even a small amount”.
Expresso’s article adds that as well as cutting back on expenses, more and more Portuguese are using online platforms like OLX or Vinted to sell items to help them ‘get through the month more easily’. Shops like ‘Cash Converters’, which purchase articles and then re-sell them, have also registered an unprecedented uptick in business.
