The Brazilian government on Wednesday increased its 2026 inflation forecast to 5.1%, up from the 4.5% projection issued in May. This revised figure places expected consumer price growth above the central bank's official target of 3%, which allows for a 1.5 percentage point tolerance band.
According to the Finance Ministry's Economic Policy Secretariat, the adjustment was driven by supply-side pressures on food prices, specifically noting that milk, rice, and beans have seen increases exceeding historical averages. The ministry also reported an acceleration in the prices of manufactured goods and high inflation in the services sector, though it noted that underlying inflation measures have slowed recently.
The government maintained its 2026 economic growth forecast at 2.3%, stating that while activity remained resilient through May, high interest rates are expected to slow growth in the future. In June, Brazil's central bank lowered the benchmark Selic rate by 25 basis points to 14.25%, indicating that borrowing costs would likely remain restrictive to manage inflation.
Looking toward 2027, the government raised its inflation estimate to 3.6% from 3.5%. Simultaneously, it lowered its projection for gross domestic product (GDP) growth for that year to 2.5%, down from the previous forecast of 2.6%.