Brazil raises inflation forecast to 5.1%

Sao Paulo, July 15 (Xinhua) -- The Brazilian Ministry of Finance released the "Macro Financial Bulletin" on the 15th, which showed that due to the potential impact of the Middle East situation and El Ni ñ o phenomenon, the government has raised the forecast for the national broad consumer price index (IPCA) growth rate in 2026 from 4.5% in May to 5.1%; Maintain the forecast of a 2.3% increase in Gross Domestic Product (GDP) for 2026.

 

The Brazilian Ministry of Finance has raised its inflation expectation to 5.1%, which is higher than the upper limit of the Brazilian central bank's inflation target of 4.5%. As of June this year, Brazil's cumulative inflation rate over the past 12 months was 4.64%.

 

In terms of economic growth, the Brazilian Ministry of Finance maintains its forecast of a 2.3% GDP growth in 2026, believing that economic activity will continue to expand, but it is expected that the growth momentum in the second quarter will slow down compared to the first quarter. At the same time, the Ministry of Finance has lowered its GDP growth forecast for 2027 from 2.6% to 2.5%, and raised its inflation forecast for 2027 from 3.5% to 3.6%.

 

The analysis team of the Brazilian Ministry of Finance believes that the more severe El Ni ñ o phenomenon may change the distribution of rainfall and temperature in Brazil, affect agricultural production, reduce food supply, push up food prices, and increase energy and logistics costs, which is also the main reason for the upward adjustment of inflation expectations this year.

 

The Brazilian Ministry of Finance stated that the situation in the Middle East remains a significant external risk affecting the economic outlook. Previously, the ceasefire between the United States and Iran temporarily eased international oil price pressure, but the resurgence of conflict in early July once again pushed up international oil prices and increased uncertainty faced by the global economy. (End)