Analysts surveyed by the Brazilian Central Bank raised year-end inflation forecasts for a seventh consecutive week to 5.6 percent. Meanwhile, for the fourth consecutive week, GDP growth predictions were parked at 0.3 percent.
Markets expect food prices to go further up as a result of economic pressures from the Russia-Ukraine conflict. The countries at war are among the world’s leading wheat exporters — which affects Brazil, even if most of its wheat imports come from Argentina. Wheat futures trading in Chicago are up 40 percent since the beginning of the year and reached their highest levels since the global financial crisis, in response to the conflict.
Oil prices have also experienced a dramatic hike — with the Brent global benchmark blasting the mark of USD 111 per barrel on Wednesday, its highest since 2014.
A month ago, our Explaining Brazil Podcast talked to Mario Braga, a senior political risk analyst for Control Risks in Brazil, about the risks of the war in Europe for the Brazilian economy, which include “imported inflation.” You can listen here.