Inflation expectations climb amid the fog of war

Since war broke out in Iran on February 28, triggering the closure of the Strait of Hormuz, global oil markets have been convulsing. For Brazil, where the Central Bank has only just begun easing monetary policy, the timing could hardly have been worse.

Market analysts surveyed by the Central Bank in its weekly Focus Report now expect Brazil's benchmark IPCA inflation index to close 2026 at 4.31% — up from 4.17% the previous week and from 3.91% just four weeks ago. That marks the third consecutive upward revision. Projections for 2027 and 2028 have also crept upward: to 3.84% and 3.57%, respectively.

Crude prices, which hovered around USD 70 per barrel before the conflict, have remained above USD 100 — a shock that is working its way to fuel pumps across Brazil and could quickly spill over into supply chains.