BRASILIA: Inflation expectations are rising in Brazil, with a growing number of economists raising their 2021 forecasts above the central bank's target as strong commodity prices and the persistently weak exchange rate show little sign of turning.

Brazil's real remains under heavy pressure, its 4% fall against the dollar so far this year and 30% slump last year both among the steepest of any currency in the world, pushing up the prices of imports and foodstuffs in particular.

Banco Itau's economics team, led by chief economist Mario Mesquita, on Friday raised its 2021 inflation forecast to 3.8% from 3.6%, citing strong industrial price pressures.

"We emphasize that the (upward) pressure of industrial costs is also being seen in other economies, given the robust demand recovery after coronavirus shock and surging commodity prices," Mesquita wrote.

Solange Srour, chief economist at Credit Suisse, revised her year-end forecast to 4.5% from 4.2%. She also noted the inflationary impulse from deteriorating public finances as the government extends emergency cash transfers to the poor.

"The balance of risks for our inflation forecast remains biased to the upside," she wrote in a note on Friday, adding that inflation will peak at 7.1% in May.

The central bank's year-end inflation target is 3.75%, with a 1.5-percentage-point margin of error on either side. The bank's interest rate-setting committee, known as "Copom," meets next month, and pressure to deliver the first rate hike since 2015 is mounting.

That is what Credit Suisse's Solange and economists at Barclays expect. Economists at Morgan Stanley think Copom will start the tightening cycle in the second quarter, but acknowledge a "high probability of a rate hike" in March.

"Inflation expectations are on the rise, and we expect the central bank to lift its inflation forecast under its base case," they wrote in a note this week.