Economy Inflation at 10.06% is the highest since Dilma’s administration; Bacen President had to explain overshooting of target

We haven't seen inflation above 10% in Brazil since 2015 (Marcello Casal-Agência Brasil)

Nauzila Campos – Cenarium Magazine

MANAUS – The Brazilian Institute of Geography and Statistics (IBGE) released on Tuesday, 11, the accumulated inflation in 2021. The index is the highest since 2015: 10.06%. In that year, inflation reached 10.67%, under the Dilma government. The number is far above the target set by the Central Bank for 2021, of 3.75% with a margin of error of 1.5 percentage points more or less (2.25% or 5.25%).

The near record was reached even with a deceleration in December of the IPCA, the Broad Consumer Price Index, which measures inflation. Considering only the monthly variation, the rise was 0.73% – while in November it was 0.95%.

Read also: Economic policy prevents a drop in inflation by 2022: ‘Trend is to rise due to lack of good prospects

And even after the second semester, when specialists were already following the hitherto unexpected rise in inflation, the established expectation did not exceed 9.97% (Reuters). The projection of the Central Bank was a little less optimistic: the last Focus Bulletin expected 2021 to close with the IPCA at 9.99%.


The law obliges the president of the Central Bank to justify the reasons why the annual inflation target was missed. By means of an open letter, Roberto Oliveira Campos Neto, president of the Central Bank, explains himself to the Minister of Economy and president of the National Monetary Council, Paulo Guedes. The letter was published this Tuesday, 11, with 14 pages, and puts as factors of inflation in 2021 the “strong rise in prices of tradable goods in local currency, especially commodity prices; electric power flag of water shortage and imbalances between demand and supply of inputs”, in addition to bottlenecks in the global production chains and the changes in consumption patterns caused by pandemic, driven by ‘expansionist’ policies – that is, exporting more than producing at home.

The letter also says that rising inflation is a global problem. At the end of the text, the president of the Central Bank seeks as a solution another interest rate increase, through the Selic rate, which is already high (9.25%).

For 2022, the Central Bank is not looking for such a low perspective as it did in 2021, when it established 3.75% as its target. This time, the Focus projection is that inflation will end the year at 5.03%, in a projection with a lot of confidence given the still unstable economic scenario.

Check out the full letter from the Central Bank justifying the high inflation here.