Bruna Ballestero, Brazil and Southern Cone researcher at Control Risks: “The central bank’s last Focus-Market Readout projects that inflation will be at 4 percent in 2027 and 3.8 percent in 2028. Sustained inflation levels are particularly fueled by food items, which reached 7.69 percent in 2024. An inflation rate of 3 percent or less, in line with the central bank’s target, is very unlikely by the end of 2027. However, it is likely to decrease as a result of the Brazilian real’s slight recovery against the U.S. dollar and a decline in the price of energy commodities. Success will depend heavily on continued central bank independence and compliance with the fiscal framework. According to Oxford Economics, the tight labor market suggests that economic activity remains resilient, which is likely to continue pushing price levels up on the cost side and contribute to a slow and steady decline in inflation. Dependence on volatile food and energy prices amplifies inflation swings, which are further driven by persistent global factors, such as tight international financial conditions and geopolitical risks. Brazil’s…”