The producer price index (PPI) came in above expectations in January, adding to the latest personal consumption expenditures (PCE) deflator reading to form a much less benign picture for inflation in the United States. Recent attacks on Iran suggest that the disinflation driven by falling oil prices is likely to be interrupted, at least for a few months, which will certainly affect inflation forecasts and FOMC monetary policy decisions.
Despite the exchange rate appreciation, which reduced the stock of non-financial sector debt denominated in reais, both indebtedness and delinquency levels remained at concerning levels in January 2026. The situation is likely to worsen (with the economic slowdown) before improving (with lower interest rates).
