Brazil: Government raises inflation forecast for 2022 from 6.6% to 7.9%

RIO DE JANEIRO, BRAZIL – The Ministry of Economy raised from 6.6% to 7.9% the projection for inflation this year, driven by higher food prices and administered prices, such as energy. The agency maintained the projection for the economy’s growth of 1.5%.

The data were released on May 19 in the MacroFiscal Bulletin, prepared by the Economic Policy Secretariat of the Ministry of Economy.

The projection for inflation is above the one expected by the financial market. According to the latest Focus Bulletin from the Brazilian Central Bank (BC), economists are betting on a 7.89% advance in the IPCA in 2022.

Inflation reached 12.03% in the 12-month accumulated until April. In other words, both the government and the market expect prices to slow down by the end of the year. The level of both, if confirmed, will exceed the ceiling of the target stipulated by the National Monetary Council of 3.5% in 2022.

In an event in São Paulo, the Minister of Economy, Paulo Guedes, said the “hell” of inflation has already passed in Brazil while European countries have accelerated prices.

“There is a shortage of butter in Holland; people are fighting in line for gasoline in England, which had the highest inflation in the last 40 years and will have double digits soon. They are going to hell. We are already out of hell, we know the way, and we know how to get out of the bottom of the pit quickly.”

GDP

Commenting on the data in the bulletin, Guedes said he expects “positive surprises throughout the year.”

According to him, the government’s accounts are under control on the one hand. On the other, there is an economic recovery in the country.

“Brazil is with strong fiscal, quite better than the financial performance of all the countries out there, confirming our expectations that we would surprise.”

For the economic team, the improvement in the performance of the Brazilian GDP is driven by the recovery in the services sector and expansion of investments, which has encouraged job creation.

Financial market analysts expect a 0.7% increase in the 2022 GDP, the economic team, 1.5%.

For 2024, 2025, and 2026, the government’s forecast continues for annual GDP growth of 2.50%.

MINIMUM WAGE

The government estimates INPC (National Consumer Price Index) of 8.1% in 2022. The indicator is used to readjust the minimum wage and the floor of pensions in the country.

Currently, the value of remuneration is R$1,212 (US$246). If the percentage of INPC is materialized until the end of the year, the minimum wage will pass to R$1,310 in 2023.

With information from Poder360

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