(Bloomberg) -- Major international banks including JPMorgan & Chase Co, Barclays Plc and Credit Suisse Group AG warned that Brazil’s inflation expectations for 2022 risk deteriorating further after consumer prices jumped more than expected. 

Annual inflation breached 10% in mid-September, the most since 2016 and well above what economists in a Bloomberg survey expected. Fuel prices rose over 2% from the previous month, while food prices increased more than 1%. The data came after the central bank raised interest rates by a full percentage point and signaled another hike of the same magnitude next month.  

JPMorgan now sees consumer prices jumping 8.4% this year, up from its previous 7.9% forecast. The bank also revised up its projection for 2022 to 3.9% from 3.7%. 

“The last time we revised our 2022 scenario we were looking for this year’s inflation at much lower levels,” JPMorgan economists Vinicius Moreira and Cassiana Fernandez wrote in a research note. “We believe that inertial effects should bring 2022 higher too.”  

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Barclays and Credit Suisse are even more pessimistic: both banks revised up their 2021 inflation forecasts to 8.7%. For next year, Barclays sees consumer prices rising 4% while Credit Suisse expects them to jump 5.2%.

“The latest dynamics show no room left to absorb new pressures that may still arise from the ongoing reopening of the economy and (modest) improvement in the labor market,” Barclays analyst Roberto Secemski wrote.

Brazil’s central bank targets inflation at 3.75% this year and 3.5% in 2022, which remains their main time horizon for monetary policy. 


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