With rising food prices and the Middle East War, the government raises inflation projections to 5.1%, exceeding the target

According to the economic team, despite the slowdown in the Broad Consumer Price Index (IPCA) in June, food continued to be the main factor putting pressure on inflation accumulated in the year. The government also stated that seasonally adjusted measures - that is, taken in the face of extraordinary events, such as war - remain above the historical standard "From May to June, second-round effects were observed in the prices of some production chains, despite the recent relief in oil prices, which tends to reduce pressure on global costs", stated the Ministry of Finance. The department assesses, however, that it is still too early to conclude that prices have stabilized. "However, it is still too early to say that prices have stabilized: the ceasefire remains fragile, and its interruption, after the cutoff date of this bulletin, constitutes an upward risk not incorporated into the projections. Furthermore, the possible increase in demand, to replenish stocks, and damage to infrastructure in the Middle East could be vectors for an increase in oil prices", they continue. The Ministry of Finance also points out other factors that could keep inflation under pressure in the coming months. Among them are the remaining space for the pass-through of wholesale prices to consumers, which could increase the costs of industrial goods, and the increased probability of a more intense El Niño. According to the ministry, although the climate phenomenon should mainly affect the 2027 harvest, it could already put pressure on food prices in 2026. June inflation is the lowest for the month in 3 years, but it is still above the target ceiling established by the Central Bank Jornal Nacional/ Reproduction Economic growth The Ministry of Finance maintained its projection for Gross Domestic Product (GDP) growth this year at 2.3%, despite the economic slowdown. If confirmed, it will be the same growth rate recorded in 2025. "The coinciding indicators remained mostly positive at the beginning of the second quarter, without signaling a loss of widespread traction. In the comparison between quarters, with seasonal adjustment, the IBC-Br advanced 1.2% in the quarter ended in April 2026, at a pace close to that of the quarter ended in March", assessed the Economic Policy Secretariat. "Industry maintained its main momentum, with an acceleration in the quarterly reading up to May, even though it declined in the monthly margin that month, after four consecutive months of increases, reflecting the decline in mining and the stable performance of transformation," he continued.