Inflation: bad now, higher uncertainty ahead

BRAZIL ECONOMICS - Report 28 Apr 2025 by Alexandre Schwartsman, Cristina Pinotti and Diego Brandao

In recent months, there has been an acceleration in underlying inflation measures and an increase in the diffusion index. Industrial goods prices have also accelerated, reflecting the depreciation of the real throughout 2024. Since exchange rate pass-through occurs with a lag, it is possible that pressures on industrial goods prices will persist for some time.

However, the recent appreciation of the exchange rate and the expected slowdown in the global economy could help alleviate some of the inflationary pressures going forward. Still, the outlook for inflation control remains challenging and marked by high uncertainty.

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