Living in Portugal is becoming increasingly challenging. The Portuguese people’s budgets are becoming too tight to cover housing and food expenses, a reality that is corroborated by Numbeo’s cost of living index, which places the main Portuguese cities behind those of Eastern European countries.
The cities were scored according to the following indices: Cost of living; Rent; Cost of living plus rent; Food; Restaurant prices; and Local purchasing power.
In the “Cost of Living Index by City 2024”, in an analysis of the European continent, the cities of Lisbon (49 points) and Porto (45.6 points) are in 50th and 57th place, respectively, in terms of cost of living on the continent.
Of the 94 countries that make up the ranking, only cities in Eastern European countries, such as Romania, Bulgaria, Montenegro and Macedonia, are behind Portugal in terms of cost of living.
In terms of the rental index, that is, the effort made to pay rent in the regions, the city of Porto (26.6 points) is ahead of the capital (33.5 points). Adding the cost of living and rent, Porto is ahead by 26.6 points in 49th place, followed by Lisbon (33.5 points) in 57th.
Looking at the Portuguese table, the study shows that, in terms of food/shopping costs, Lisbon is in 48th place with 47.5 points, while Porto is in 57th with 43.5 points. Again, these figures are only surpassed by Eastern European countries.
In terms of restaurant costs, Lisbon leads, occupying 51st place with 45.3 points, while Porto is in 63rd place with 38.4 points.
When it comes to the total purchasing power index, Portugal is in the second half of the table, only surpassing countries such as Ukraine, Russia, Moldova and Serbia. Here, Lisbon is the Portuguese city with the lowest local purchasing power, occupying 76th place with 55.7 points, while Porto is in 71st place with 61 points.
The worst is yet to come
But the analysis becomes more complicated for Portugal if we filter only by Southern European countries.
In this context, Lisbon is in the Top 10 cities with the highest cost of living. The capital occupies 10th place with 49 points. Porto is just below, in 14th place, with 45.6 points.
Above Lisbon, only the cities of Milan, Bologna, Turin, Rome, Barcelona, Thessaloniki, Athens, Madrid and Ljubljana are more expensive.
And the situation gets even worse. In terms of rent, the Portuguese capital is the second in Southern Europe where there is the most effort in the wallet to pay the rent, only surpassed by Milan, with Porto next on the list, in fifth place, with 26.6 points.
Combining the cost of living index with rent, Portuguese cities continue to be at the top. Lisbon is in 5th place with 33.5 points, followed by Porto in 9th place with 26.6 points.
Returning to the table, this time more Mediterranean, in terms of food/shopping costs, Lisbon occupies 10th place with 46.5 points, while Porto is in 15th place with 43.5 points. In terms of restaurant costs, the Portuguese capital occupies 12th place in Southern Europe with 45.3 points, while Porto is in 16th place with 38.4 points.
In terms of the local purchasing power index, the two largest Portuguese cities are in the middle of the Southern European table, with Lisbon occupying ninth place with 55.7 points, while Porto occupies 12th place with 61 points.
Net salary is the highest on record
However, the average monthly net salary of employees in Portugal reached a new record in the 2nd quarter of 2024, surpassing all historical records since the beginning of the series of the National Statistics Institute (INE), which dates back to 2011.
The annual increase was 8.9% compared to the same period in 2023, raising the average value of the net salary to 1,137 euros per month.
This increase in the average salary can be attributed to several factors such as the impact of the tax relief on IRS, which came into force in January 2024, resulting in significantly lower tax withholdings for employees. In some cases, the tax relief reached around 10%, which, together with the maintenance of the Social Security contribution rates, contributed to the increase in employees' net income.
Another relevant factor for this salary growth is the increase in public servants' salaries, implemented at the beginning of the year. According to data from the Ministry of Finance, personnel expenses grew by 7.7% in the first half of 2024, driven by measures to increase the income of workers in public functions. Professionals such as teachers and doctors, classified as “specialists in intellectual and scientific activities”, also saw a significant salary increase, with an average increase of 8%, reaching 1,566 euros net per month.
The group of politicians, chiefs and top managers also saw a notable increase in their salaries, with an average salary increase of almost 9% compared to the previous year, reaching 1,889 euros per month.
The 10 most expensive cities in the world
According to the “Cost of Living Index by City 2024”, Geneva, Switzerland, is the most expensive city in the world to live in. The city was found to be 1.7% more expensive than New York City. Estimated monthly costs for a single person are around 1,570 euros, without rent, while estimated monthly costs for a family of four are around 5,767 euros.
The city is consistently ranked as one of the best places to live based on quality of life, as it offers a low crime rate and a variety of jobs.
Here is the rest of the list:
Geneva, Switzerland
Zurich, Switzerland
New York, USA
San Francisco, California, USA
Boston, Massachusetts, USA
Reykjavik, Iceland
Washington DC, USA
Seattle, Washington, USA
Los Angeles, California, USA
Chicago, Illinois, USA
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Source: Executive Digest
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