Portugal 2025 (Important Inflation Update at end)

In winter 2025 we departed Canada and headed to Madeira, Portugal.

Madeira is an autonomous region of Portugal, that is an island archipelago in the Atlantic, closer to the coast of Africa and the Spanish Canary Islands than Europe.   There are actually more than one, but mainly two inhabited islands, totalling just over 800 square kilometer's, with a population of just over 250,000 people.  It is just under 3.5 times the size of Fogo Island !  Madeira is a volcanic island with a mild climate.  The capital, Funchal, has a mean average daily high temperature of above 20C almost year round.   Funchal is the main business and tourist center, with a population just over 100,000. Funchal is also a busy cruise port destination.  

We stayed 9 nights in Madeira, in the Funchal area.  We thought Madeira was spectacular!  It is sometimes referred to as the pearl or Hawaii of the Atlantic.  We did several hikes, including among the mountain peaks above clouds, alongside water irrigation channels (turned hiking trail), called  “Levadas”, in a banana plantation; we took a day tour with lunch and wine tasting to the north area of the island, we rented a car for 4 days and did some hair raising driving to various sites, we twacked around scenic Funchal, including the historic center , botanic gardens and rode the cable car.  It was a whirlwind 9 days!

We then flew to Faro, Portugal, on the mainland southern coast, known as the Algarve.  We have visited the Algarve in 2010, 2015, 2022, 2023 and 2025.   

We had intended to stay 2.5 months in the Algarve but that was cut short due to a family illness back home.  We did stay for just about 50 days in the Algarve.  

On the first night in the Algarve, before our first condo stay, we had one night at the Pestana Viking in the town of Porches.  This is a very nice resort style property at a good price in the off season. 

We stayed the first month in a smaller, quieter town called Armacao de Pera.  We had done day trip visits to this town on previous trips but not stayed overnight in the town.  We rented a 1 bedroom condo directly from a local property rental company, about a block off the oceanfront promenade street.  While in Armacao we had friends from British Columbia join us to hang out in the Algarve.   They stayed in a condo rented from the same company about a 10min walk from our location.

After our stay in Armacao, we moved to Praia da Rocha, the beach town adjacent to the city of Portimao.  We rented a 1 bed condo here directly from a local real estate company.   The condo was a block from the promenade street.   We have also visited this area in previous day trips but never stayed overnight.

While on the Algarve, we day tripped to various towns, most of which we had visited before, including:

-Lagos

-Ferroguda

-Luz

-Salema

-Burgau

-Sagres

-Albufeira

-Olhos d’Agua

-Loule, twice, once for the Carnival Parade and also on a Saturday market day

-Olhao & Armona Island

-Tavira

While in the Algarve we rented a class c vehicle from Amoita Car Rental in Faro.  

After the Algarve we dropped our car at Faro Airport and then took the Flix Bus from Faro Airport to Lisbon Oriente train/Metro station.  We stayed at a hotel near to the Oriente station, for easy next day access to the Lisbon Airport.

The day and trips reports are still a work in progress, stay tuned, lol.

Inflation in Portugal:

First off the conversion of Canadian dollars to Euros has been going the wrong way in the last 2 years and is contributing to cost inflation for Canadians.  

Inflation has certainly hit Portugal in the last few years and perhaps especially in 2024-2025.   

Virtually every town of size in Portugal now has a local tourist tax.  With the number of tourists increasing significantly in recent years it is hard to criticize this, if it is meant for investment in infrastructure that is used by tourists.  They are investing in tourist infrastructure on the Algarve as we observed 2 impressive new coastal boardwalks, one in Armacao and another in Lagos.  This tax is in the range of 1-4 Euros per day per person, for up to 7 days, maximum charge, typically.  It is collected by your hotel or rental accommodation.  It may or may not be listed with the hotel or rental accommodation (you do not avoid it by staying in an Airbnb or vrbo) price.  It is a mandatory government tax.  I think we look at it as the cost of using the infrastructure of the country,  not as a negative.  But it can add up if you stay in different towns for an extended stay.  

Most everything else has also gone up in price, especially hotels, restaurant meals and golf, but also groceries.  One offset is the recent elimination of road tolls on the Algarve autostrada, which if you rent a car is a nice saving.   Grocery prices are still lower than Canada, if you are buying local products. Oranges in the Algarve are amazing, still cheap and sold on roadside stands!  Local produce is very reasonably priced.  If you want a pineapple (or other imported item), imported from elsewhere, you will pay for it and perhaps more than Canada.  But you can get plenty of local produce, meats and other grocery items, lots of modestly priced store brands, that are excellent quality (we do draw the line at store brand coffee, lol).  

If you search out restaurants away from the tourist areas, you can still get good value.  On this trip we saw typical restaurant entrees priced from 14-25 Euros, yet in the small town of Armacao de Pera, we found a local gem called Balbinos, with great food and a tourist menu (you must specifically ask for this and it is better than the regular menu pricing, unlike what you would expect) that had three courses for 12.5 Euros (we are not sure how long that price will last!)!  If you are in Albufeira and have a car, go to the nearby town of Guia and a piri piri chicken restaurant (there are several).  If you come across a Pingo Doce supermarket with a restaurant, this is where the locals eat lunch!  This will be good food at fantastic value.  Note that not all Pingo Doce supermarkets have the full restaurant.  

Don’t always go for the restaurant or bar in the main square of any town or the one with the great view, walk around to a side street and look for a place full of locals (except if you are in a tourist hotspot you probably won’t see any locals!).  

Lisbon has become very heavily touristed since we first visited in 2010.  The amount of tourism and conversion of apartments in old town Lisbon to Airbnb/vrbo is noticeable and very controversial.  Hardly any locals live in some areas now (just tourist rentals).   The prices of hotels has risen dramatically in Lisbon, with a budget (we are talking comfort inn or less!) hotel now costing $200+Ca.  There are many options for hotels and airbnb/vrbo accommodations in different areas of Lisbon, so some research is recommended.  

We have frequently visited the Lisbon Timeout Market and enjoyed it, despite its crowding and touristy atmosphere.  However, after a visit in 2025 the prices have gone far too high when combined with the quantity of food served.  So we would no longer recommend it.  

We would still very much recommend a visit to Lisbon, if you have never been.  It is a great city, with amazing views (Miradouros), many interesting museums and historic sites, great food options and fantastic options for day trips to places like Belem, Sintra and Cascais.

The Algarve is still good value, especially for long stays, but more so in the less frequented towns.  

Another example is the Douro Valley.  A hotel we stayed at in 2017 that was under $200 a night, in a beautiful setting near Peso da Regua, is now listed for over $600 Ca a night.  The good news is there are lots of other very good accommodations in the Douro valley for $150-$250 Canadian a night.  

The other many towns of Portugal, aside from Lisbon, Algarve and Porto, are still very good value for cost of travel.   There are still many of these lesser known gems in Portugal.  Away from the hotspots, think Sesimbra, Alcacer do Sol, Estromoz, Evora (this is a beautiful town but it is touristy), Beja, Mertola, Peniche, Coimbra, Braga, etc.   You might need a car to get to some of these other towns, but train and bus can work for some.  These are not as touristy and may not have polished tourist sites but you can stay and experience the people, culture and food of Portugal at very good value.  The Pestana Pousada Hotels are a good option to check out, though they are not the cheapest in each place.  They offer very nice accommodations with a great breakfast and great service, sometimes in a former monastery, castle or other historic place.  In the past some of the hotels in lesser known towns seemed crazy cheap, think a four star historic property for $125 Ca a night with buffet breakfast!  Now those are probably $150-$250, still great value when compared with other countries.   The time of year matters greatly for pricing.  Seasonal pricing is very prevalent, with summer being most expensive (sometimes double or triple the off season prices), shoulder seasons of April/May & Sept/Oct next in price level, with November to March being the best values.   An example of this if you look up prices for the Pestana Viking (an older but nice seaside resort type hotel) on the Algarve in Porches, the prices on their website (July 2025) range from just over $100 Ca a night with breakfast in winter 2026 to upwards of $300 Ca a  night for the same room next summer!  We stayed here on Feb 28, 2025 and paid 62 Euros for 1 night with a buffet breakfast.