The Brazilian economists raised their inflation forecast for 2026 above the maximum limit set by the central bank, the latest consequence of the energy impact of the war with Iran.
According to a weekly central bank survey of economists released Monday, The increase in consumer prices will reach 4.71% in December, exceeding the previous estimate of 4.36%. This figure exceeds the target of 3%, with a tolerance margin of plus or minus 1.5 percentage points. The inflation forecast for the end of 2027 was also raised to 3.91%.
The increase in fuel prices is affecting Brazilians and complicating central banks’ plans to continue reducing interest rates to double digits. President Luiz Inácio Lula da Silva is racing to contain the economic impact ahead of elections later this year.
Last month, the monetary authority reduced the Selic reference interest rate for the first time since 2024, after having brought the annual inflation rate closer to its objective. However, weeks of war are rapidly eroding those gains.
The resulting inflationary pressure has led economists to raise their 2026 inflation forecast by 80 basis points since the crisis broke. conflict in the Middle East, including an increase of 35 basis points in the last week.
