Brazilian consumer inflation forecasts for the next 12 months varied 0.1 percentage point in October, reaching 5.7% and returning to the level of August this year. The index dropped 0.7 percentage point over the same period last year.

“The result shows that consumer inflation expectations have been well anchored in recent months. Despite an increase in market expectations for next year, consumer inflation expectations remain stable. This is great news, as the election period is ending and there has been no relevant price shock”, said economist Pedro Costa Ferreira, from FGV’s Brazilian Institute of Economics (IBRE).

In the distribution by expected inflation ranges, the number of consumers who projected values within the tolerance limits (3%-6%) of the inflation target of 4.5% set by the National Monetary Council for this year dropped from 57.6% in September to 57.1% in October. The number of consumers who project values below the lower limit (3%) dropped 2.0 percentage points, from 8.4% in September to 6.4% in October, the lowest number in the last six months. The ratio of consumers who expect inflation figures above the middle of the target went from 61.3% to 66.2% in the same period, the largest number in the past six months.

In October, inflation expectations dropped at all income ranges except for families with monthly income between BRL 2,100.01 and BRL 4,800.00, whose 0.4 percentage point increase influenced the relative increase during the month.

The complete study is available on the website.