Beware the rising cost of living

9th of November 2021

Dividing my time between England and the Algarve provides an opportunity to compare the way of life between the two countries. In Portugal, the rules surrounding how to behave in the face of the pandemic have been stricter than back in England, which is somehow rather comforting. And it does feel more relaxed here. True, warmer weather makes staying outside for much of the time easier than is the case in England.

One similarity is that the building industry appears to be booming in both places, with house prices soaring. Indeed, it appears that property values all around the world are on the up. Quite why an outbreak of a highly contagious virus, which has disrupted life in so many different ways, should spark a boom in house prices is difficult to understand. Perhaps it is the fear that inflation could be rekindled, bringing to an end a lengthy period of relatively stable prices. Certainly, the cost of living is being driven up in many corners of the globe.

The pandemic may indeed be responsible in some measure. Real estate agents in both the Algarve and England have reported a dearth of properties for sale. It seems many of us are less inclined to move, perhaps because successive lockdowns have encouraged us to stay at home. Yet demand for houses continues to rise from those who have been prompted to seek out a change in lifestyle, perhaps again because of COVID restrictions. Add this to the upward pressure on the cost of living brought about by escalating energy prices and higher inflation looks inevitable.

High and sustained inflation is definitely something to be feared and avoided at all costs. Modest inflation, on the other hand, is