Oil shock, inflation ripple effects, and the economic scenario – Economic Analysis (05.05.2026)

We present the May edition of RADAR 4i. The global economic landscape faces an environment of high uncertainty driven by armed conflicts in the Middle East, resulting in a severe oil price shock with direct impacts on global and Brazilian inflation.

International Outlook: Geopolitical Tension and Prices

• Oil Shock: The closure of the Strait of Hormuz caused the Brent spot price to surge, surpassing the $140 per barrel mark.
• US Impacts: The global hike is already impacting North American price indices, with the general CPI registering a 3.3 positive variation. Given this inflationary spike, the market is projecting lower GDP and household consumption growth.

Brazil Scenario: Inflation, Deceleration, and Politics

• Inflationary Pressure: The IPCA rose 0.88% in March (4.14% over 12 months), above projections, largely driven by the Transportation group (+1.64%) due to rising gasoline and diesel prices. A deceleration is expected in the coming months.
• Economic Activity: The services and retail sectors (both core and expanded) grew slightly but came in below market expectations in February, indicating an economic slowdown and a drop in sector confidence.
• Labor Market: The unemployment rate remains stable and historically low at 5.4%. Real regular income continues to rise, ensuring consumption resilience.
• Political Impact: Rising fuel prices have negatively impacted the current government’s approval rating. The electoral race remains tight, and the I-GOV governability index registered 48.3% at the beginning of March.

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