Market raises forecast for inflation in 2022 to more than 6%, shows Focus

The market has strongly raised the outlook for inflation this year above 6% and began to see greater monetary tightening, in the wake of rising fuel prices and ahead of the Central Bank’s monetary policy meeting this week.

The Focus survey released by the BC this Monday (14th) showed that the experts consulted increased the projection for the IPCA high this year to 6.45%, from 5.65% in the previous week, well above the ceiling of the target, of 5.0%.

The account for 2023 also rose and reached 3.70%, from 3.51% before. The center of the official inflation target for 2022 is 3.5% and for 2023 it is 3.25%, always with a tolerance margin of 1.5 percentage points more or less.

Last week, Petrobras announced an increase in diesel prices by around 25% at its refineries, while gasoline prices are expected to rise by almost 19%, in the wake of gains in oil prices on the international market due to the war in Ukraine.

As a result, the projection for the increase in administered prices in the BC’s weekly survey jumped to 5.61% and 4.50%, respectively, in 2022 and 2023, from 4.85% and 4.28% before.

In February, the IPCA reached the highest level for the month in seven years, at 1.01%, under the weight of education and food costs, taking the 12-month rate to 10.54%.

Intense inflationary pressures have led economists to raise forecasts for the basic interest rate both this year and next, to 12.75% and 8.75% respectively. The previous survey pointed to an expectation of a rate of 12.25% in 2022 and 8.25% in 2023.

It is with this scenario ahead that the BC meets this week to decide on monetary policy. According to Focus, the monetary authority should raise the Selic to 11.75% at the meeting, compared to the current rate of 10.75%.

At the same time, the account in the weekly survey for GDP (Gross Domestic Product) growth this year rose to 0.49% in 2022, but fell to 1.43% in 2023, from 0.42% and 1.50% before.