COVID-19: Market expectations for inflation rise in Brazil

The Central Bank of Brazil’s market expectations for consumer inflation in 2021 rose according to the latest data from the Market Expectations System from September 3. The country’s official inflation index, the IPCA, is expected to grow at 7.58% y/y compared to an estimation of 6.88% four weeks earlier.

Electricity prices have been skyrocketing, as the country faces a severe drought in reservoirs of some major hydroelectric plants. In addition, many analysts have revised down their forecasts for GDP in 2021, after the release of the country’s quarterly GDP on September 1, as Brazil registered a contraction of 0.1% q/q in Q2 2021. Brazil’s GDP is expected to rise by 5.15% y/y in 2021, compared to an estimation of 5.3% four weeks earlier.

Further data and analysis on Brazil’s economy are available on the CEIC Brazil Economy in a Snapshot – Q2 2021 report.