Consumer inflation projections at an all new high since December 2017
Brazilian consumers’ inflation expectation for the next 12 months rose from 5.4% in July to 5.7% in August – the highest value recorded since December 2017, according to FGV’s Brazilian Institute of Economics (IBRE). The index dropped 0.6 percentage point over the same period last year.
“The increase in inflation expected for the next few months significantly reflects the perception of price hikes during the truck drivers’ strike, as shown by price indicators in May and June. The increase is widespread among the surveyed income classes and regions, suggesting that consumers are largely sensitive to the issue, which may lead to new increases amidst the lingering political uncertainty and added pressure factors, such as the recent devaluation of the real against the dollar”, said IBRE economist Viviane Seda Bittencourt.
In the distribution by expected inflation ranges, 56.3% of consumers in August projected values within the tolerance limits (3% - 6%) of the inflation target of 4.5% set by the National Monetary Council (CMN) for this year. The ratio of consumers indicating values below the lower limit (3%) dropped from 14% in July to 8.2% in August. The frequency of forecasts above the upper limit (6%) rose from 34.0% in July to 35.5% in August – the highest level in the last six months.
The expectation of inflation advanced in all income ranges, especially among households with income up to BRL 2,100.00, where the index varied 0.5 percentage point. For households with income above BRL 9,600.00, the expectation rose to 5.0%, reaching its highest level since September 2017 (5.1%).
The complete study is available on the website.