The government said it would offer a one-off payment worth 125 euros, plus 50 euros per child, to each person earning up to 2,700 euros gross per month.

Portugal rolls out 2.4 bn euro inflation relief package, Source: freepik

Pensioners will receive additional money worth half their monthly pension as a one-time payment.

The money is in addition to a 1.6-billion-euro package announced this year.

"It has been 30 years since we have been confronted by such a sudden rise in the cost of living," Prime Minister Antonia Costa told a press conference, as he called for "caution against feeding an inflationary spiral".

The government, which has an absolute majority in parliament, will ask lawmakers to vote for a reduction in VAT on electricity, from 13 to six percent, and will extend a fuel tax reduction until the end of the year.

Costa also announced a cap on rent increases next year to two percent and a freeze on public transport fares.

Consumer prices rose to nine percent in August on an annual basis, according to a provisional estimate by the official statistics body.

The government will announce a separate package for businesses.

Households and businesses across Europe are feeling the pain from sky-high energy prices as the continent moves away from Russian supplies in the wake of Moscow's invasion of Ukraine earlier this year.