Brazil Inflation Forecast Adjusted After Oil Price Surge

The Brazilian Finance Ministry has nudged its inflation outlook upward for the current year, citing a rise in expected oil prices linked to tensions between the United States and Israel over Iran. The update comes just before the central bank’s upcoming policy meeting, where officials are weighing whether to start cutting interest rates. The ministry now projects inflation in 2026 at 3. 7%, a slight increase from the previous 3. 6% estimate, while keeping its growth forecast steady at 2. 3%. These numbers assume the oil price spike will be short‑lived, with Brent crude averaging $73. 10 per barrel this year. The report suggests that the conflict will ease soon and that damaged energy and logistics infrastructure can be repaired quickly.

Higher oil costs also benefit Brazil’s economy because the country relies heavily on petroleum exports. The ministry expects an extra 21. 4 billion reais in federal revenue, even under a moderate impact scenario. Two more extreme cases are also outlined: if Brent hits $82 per barrel, inflation could rise by 0. 33 percentage points; at $100 a barrel, the increase might reach 0. 58 points. In response to recent global price hikes, Brazil removed taxes on diesel and introduced a levy on oil exports. These measures were not included in the latest projections but could influence future outcomes.

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