Brazilian consumers’ inflation expectations for the next 12 months rose 0.3 percentage points in April 2020, to 5.1%, the highest figure since July 2019 (5.3%), according to the FGV´s Brazilian Institute of Economics (FGV IBRE). In relation to the same month of 2019, the number fell 0.2 percentage points.

“As of the second half of March, a lot of people engaged in bulk buying when many large cities imposed lockdown measures, and this pushed up food prices, leading consumers to raise their inflation expectations. This result is likely to be temporary, given that the level of economic activity will remain very weak for some time, keeping inflation down,” says Viviane Seda Bittencourt, FGV IBRE’s survey coordinator.

Looking at different consumers’ projections, 45.6% of consumers predicted figures below the 4.0% official inflation target in April, the lowest proportion in the last six months. On the other hand, the share of consumers forecasting inflation exceeding the top of the inflation target range (5.5%) in 2020 rose from 30.4% to 35.9%, the highest result in the last six months.

Breaking down the results by income groups, all households, especially those with the lowest spending power, increased their median expectations for inflation in the next 12 months. The median expectation of households receiving up to R$2,100 a month went from 5.9% to 6.2%, while the figure for households earning between R$2,100 and R$4,800 rose from 5.0% to 5.6%. The median inflation rate expected by households receiving more than R$9,600 a month increased 0.1%, after spending seven months at an all-time low of 4.0%.

The complete study is available here.