Brazil Inflation May 2021


Brazil: Inflation comes in at highest level in over four-and-a-half years in May

June 9, 2021

Consumer prices increased a seasonally-adjusted 0.83% over the previous month in May, accelerating from the 0.31% rise logged in April. The result was largely due to rising prices for transportation. In addition, price pressures for food and beverages grew at a quicker pace.

Inflation came in higher than expected at 8.1% in May, which was up from April’s 6.8%. May's result was the highest inflation rate since September 2016. Annual average inflation rose to 4.5% in May (April: 3.9%).

Commenting on the outlook for inflation, Cassiana Fernandez and Vinicius Moreira, analysts at JP Morgan, reflected:

“Overall, risks to inflation seem to remain tilted to the upside, but as we enter the second half of the year there might be important changes in the fundamentals of inflation. Commodity prices in BRL have been decreasing more recently as a result of the BRL appreciation and a more stable scenario of international commodity prices. While effects from past increases should still affect the IPCA in the next couple of months and the droughts could affect particularly fresh food, food CPI may become less of a focus from August. However, we should see the services CPI – which is still at abnormally low levels – probably starting to recover as we don’t expect the economy to reopen until the end of the year. […] Another upside risk, particularly to 2022 inflation, is to administered prices […].”

Panelists participating in the LatinFocus Consensus Forecast see inflation closing 2021 at 5.0%, which is up 0.5 percentage points from last month’s forecast. For 2022, the panel projects inflation to end the year at 3.6%.

Author:, Economist

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Brazil Inflation Chart

Brazil Inflation May 2021 0

Note: Annual and monthly var. of IPCA consumer price index in %.
Source: Brazilian Institute of Geography and Statistics (IBGE).

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