The median expectation of Brazilian consumers for inflation in the next 12 months shifted from 5.3% in May to 5.2% in June. There was a 1.7 percentage point decrease when compared to the same period in the previous year.

“Expectations have remained relatively stable. This is partly due to consumer inertia, which despite the price shock that happened mainly because of the truckers’ strike, did not generate a change in inflation expectations homogenously. Lower income consumers are still projecting a drop in prices, while consumers with higher purchasing power have reset their projections”, said economist Pedro Costa Ferreira, from FGV’s Brazilian Institute of Economics (IBRE).

In the distribution by expected inflation ranges, 48.3% of consumers in June projected values within the tolerance limits (3% - 6%) of the inflation target of 4.5% set by the National Monetary Council for this year. The proportion of consumers indicating values below the lower limit (3%) retreated from 22.2% in May to 18.2% in June. The predictions between the lower limit (3%) and the target (4.5%) fell from 27.1% to 25.5% in the answers from respondents, while the projections between the target (4.5%) and the upper limit (6%) rose from 18.8% to 22.8% in the same period of comparison.

In June, inflation expectations by income range proved to be heterogeneous. Among families with household income of up to BRL 2,100.00, there was a decrease of 1.1 percentage points, from 6.5% in May to 5.4% in June. For consumers with income exceeding BRL 9,600.00, the inflation expectations advanced to 4.5%, the highest level since October 2017 (4.9%).

The complete study is available on the website.