The cost of living in Portugal has risen considerably in the last decade or so and in the major cities is now around the EU average, although it’s still relatively low in rural areas. The country has a low standard of living compared with most other EU countries. In the UBS Prices & Earnings Around the Globe report (2000 edition), Lisbon ranked 47th out of the 58 most expensive cities in the world. Inflation is low at less than 3 per cent, although unemployment is relatively high, particularly in resort areas.
In the last few decades, increased costs (particularly salaries) have brought the price of many goods and services in Portugal in line with most other European countries and imported goods can be particularly expensive. Among the more expensive items in Portugal are quality clothes (although fewer are needed in resort areas), cars and many consumer goods. Shopping for expensive consumer and household goods in other European countries or North America can yield considerable savings.
However, many things in Portugal remain cheaper than in northern European countries, including property and rents outside the major cities and top resort areas (where they can be astronomical), fresh food, alcohol, dining out and general entertainment.
It’s difficult to calculate an average cost of living in Portugal, as it depends very much on each individual’s particular circumstances and lifestyle. The actual difference in your food bill will depend on what you eat and where you lived before moving to Portugal. Food in Portugal costs around the same as in the USA, but is cheaper than in most northern European countries. €200 to €300 should feed two adults for a month, including (inexpensive) wine but excluding fillet steak, caviar and expensive imported foods.
A couple owning their home can ‘survive’ on a net income of as little as €1,000 per month (many pensioners actually live on less) and most can live quite comfortably on an income of around €2,000 per month (excluding rent or mortgage payments). In fact most northern Europeans who live modestly in Portugal without over-doing the luxuries will find that their cost of living is up to 50 per cent lower than in their home country.
This article is an extract from Buying a Home in Portugal.