Brazil's government raised its inflation forecast for this year to 5.1% on Wednesday from 4.5% projected in May, putting consumer prices above the central bank's target of 3%, with a tolerance band of 1.5 percentage points in either direction.
The Economic Policy Secretariat at the Finance Ministry, which produces the government's official forecasts, said supply-side pressures continued to weigh on food prices, noting that fresh products such as milk, rice and beans posted increases above their historical patterns.
The ministry also said inflation in manufactured goods accelerated, driven by higher prices for personal care products, while services inflation remained elevated.
It added, however, that underlying inflation measures have shown a slowdown in recent months.
The government kept its forecast for economic growth at 2.3% this year, saying activity remained resilient through May, but stressed that high real interest rates are poised to restrain the pace of growth ahead, with their full effects taking time to filter through the economy.
Brazil's central bank cut interest rates by 25 basis points in June for a third consecutive meeting, taking the benchmark Selic rate to 14.25%, and left the door open for its next policy decision in August while reiterating that borrowing costs need to remain at restrictive levels to bring inflation back to target.
For 2027, the government raised its inflation estimate to 3.6% from 3.5% previously, while trimming its forecast for gross domestic product growth to 2.5% from 2.6%.
