What is the inflation forecast for 2025?

A inflation is a key economic indicator that reflects changes in the prices of goods and services over time. For 2025, various financial institutions and government agencies have adjusted their inflation projections, taking into account internal and external factors that influence the Brazilian economy.

Current Inflation Projections for 2025

According to Focus BulletinThe projection for the Broad National Consumer Price Index (IPCA) - considered the country's official inflation - was raised to 5,6%. This marks the 18th consecutive week of an increase in inflation expectations by market analysts.

At the same time, the Ministry of Finance maintained its inflation projection at 4,8% for 2025, according to a recently released document. This estimate is in line with the rate recorded in 2024, indicating an expectation of stability in consumer prices.

It is important to note that the inflation target set by the National Monetary Council (CMN) for 2025 is 3%with a tolerance interval of 1.5 percentage points up or down, i.e. ranging from 1.5% to 4.5%. The market's current projections are therefore above the ceiling of the established target.

Contributing Factors to Inflation Projections

Several elements influence inflation expectations for 2025:

1. Restrictive Monetary Policy: The Central Bank has adopted a stricter stance in its monetary policy to contain inflation. In January 2025, the Selic rate was raised to 13,25% per year, with indications of a further increase of 1 percentage point at the March meeting, which could reach 14,25%. This strategy aims to discourage consumption and, consequently, control price rises.
2. Exchange RateThe devaluation of the real against the dollar, which reached R$ 6.00 per dollar, makes imported products more expensive, putting pressure on domestic prices and contributing to rising inflation.
3. Market expectationsInflation forecasts are influenced by the expectations of economic agents. The persistent rise in weekly projections indicates a perception of inflationary risk on the part of the market, which can affect investment and consumption decisions.
4. International sceneExternal factors, such as US monetary policy and volatility in commodity prices, also have an impact on Brazilian inflation. Changes in US interest rates can influence the flow of capital and the exchange rate in Brazil.

Inflation Control Measures

Faced with projections that exceed the target ceiling, the Central Bank and the federal government have implemented measures to contain inflation:

• Monetary tightening: Raising the Selic rate is the main tool used by the Central Bank to control inflation. Higher interest rates tend to discourage credit and consumption, reducing the pressure on prices.
• Fiscal Policy: The government is trying to balance the public accounts to avoid additional inflationary pressures. Spending control measures and structural reforms are essential to maintain investor confidence and economic stability.
• Foreign Exchange InterventionsIn times of high exchange rate volatility, the Central Bank can intervene in the foreign exchange market to prevent excessive devaluations of the real, which directly impact domestic prices.

Prospects for the coming years

In addition to the projections for 2025, the Focus Bulletin also presents estimates for subsequent years:

• 2026: The inflation projection rose from 4.3% to 4,35%.
• 2027: The estimate was raised to 4%.
• 2028: The forecast reached 3,8%.

These projections indicate that inflation is expected to gradually converge towards the center of the target over the next few years. However, the effectiveness of monetary and fiscal policies, as well as the behavior of external factors, will determine whether these expectations are met.

News

Current projections point to inflation above the target ceiling set for 2025, reflecting both internal and external challenges in the Brazilian economy.

The adoption of restrictive monetary policies, combined with responsible fiscal measures and close monitoring of the international scenario, will be crucial to controlling price rises and ensuring economic stability in the country. Investors, consumers and policymakers must remain vigilant and prepared to adjust their strategies according to how inflation evolves over the coming months.

See also: How to save money: 6 tips for saving safely

February 22nd, 2025