Credit Suisse raises IPCA forecasts to 8.3% in 2022 and 4.6% in 2023

Credit Suisse raised its expectations for Brazil’s consumer inflation to 8.3% this year and 4.6% next, citing successive surprises regarding the spread of rising prices and forecasting a more challenging international environment.

Previously, the private bank estimated that the IPCA would rise 7.8% in 2022 and 4.4% in 2023, projections that already exceeded the center of the official targets for the periods. The targets are 3.5% for this year and 3.25% for the next, with a margin of tolerance of 1.5 percentage points more or less.

“Global bottlenecks are expected to drive industrial goods prices even higher this year, pressure on fuel and food costs is stronger than our previous expectation, and services inflation next year is expected to have a stronger impact on inertia.” , said Credit Suisse in a report signed by Solange Srour, Lucas Vilela and Rafael Castilho.

“Additionally, global shocks due to the Ukrainian conflict and the Omicron variant in Asia add salt to the wound, creating an even more challenging scenario for the country’s inflation,” they said.

“We have been talking about how the inflation scenario in the country is challenging and, even so, we continue to be surprised by the generalized inflationary pressures”, they added, predicting that the disinflation process will be “long and costly”.

At the end of March, Credit Suisse had raised its forecast for the Selic rate at the end of this year to 14%, one of the highest forecasts among the main financial institutions. At the time, the private bank had said that significant monetary tightening would need to be promoted to compensate for the challenging inflation scenario.

Credit Suisse’s revision to this year’s and next year’s consumer inflation readings came after the IBGE earlier released the biggest rise in the IPCA-15 for an April month since 1995.