Brazil Weekly Inflation Risk Monitor: Upside risks tilt further up

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Brazil Weekly Inflation Risk Monitor: Upside risks tilt further up

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Brazil Weekly Inflation Risk Monitor

Upside risks tilt further up

Brazil inflation risk gauge 15 May 2026

We track inflation dynamics weekly over a 12‑month horizon by combining survey‑based GEM Economics

expectations (Focus), our proprietary projections, and market‑implied pricing. LatAm | Brazil

Inflation risk snapshot: risk increases NatachaBrazil EconomistPerez

The divergence between the one-year breakeven inflation rate and the median Focus Merrill Lynch (Brazil) +55 11 2188 4127

projection continues to be significant. In the past two weeks, breakeven inflation (BEI) natacha.perez@bofa.com

increased from 5.44% to 5.61%, while the 12-month-ahead Focus inflation projection David Beker >>

declined slightly from 4.05% to 3.97%. Consequently, the BEI-Focus spread expanded BzMerrillEcon/FILynch& (Brazil)LatAm EQ Strategy

from 1.39 percentage points to 1.64 pp, suggesting that market participants continue to +55 11 2188 4371

david.beker@bofa.com

factor in a considerable upside inflation risk premium.

Gustavo Mendes

April IPCA: headline as expected, composition deteriorated BrazilMerrillEconomistLynch (Brazil)

Brazil’s IPCA rose 0.67% mom in April, with headline inflation still accelerating over 12 gustavo.mendes@bofa.com

months to 4.39% yoy (close to the top of the target band), underscoring that the

“benign” headline masks a less comfortable composition. Price pressures remained

Exhibit 1: Gap between BEI 1-year andconcentrated on food items, alongside a strong health print linked to medication

12-months ahead inflation expectations

adjustments. Offsetting forces came from the transportation side, as gasoline rose 3-years min and max (8/May/23-8/May/26)