Brazil economists lowered their growth forecasts for this year and next as above-target inflation and low confidence curb consumption.

Brazil’s gross domestic product will expand 1.24 percent this year and 1.73 percent in 2015, compared with the previous week’s forecast of 1.44 percent and 1.80 percent, respectively, according to the June 13 central bank survey of about 100 analysts published today. Both estimates were the lowest since the central bank started publishing the data.

President Dilma Rousseff is struggling against accelerating inflation and slowing consumption as she readies her bid for re-election in October. Both retail sales and industrial output contracted in April after economic growth moderated in the first quarter. The central bank has signaled plans to keep the key rate on hold as it awaits the delayed impact of a yearlong tightening cycle.

Industrial output fell by 0.3 percent in April as capital goods production dropped, while retail revenue shrank 0.4 percent on the month amid falling supermarket sales, according to the national statistics agency. It was the second straight month that activity in both areas contracted.

Latin America’s largest economy grew 0.2 percent in the first quarter, half the pace of the expansion recorded during the last three months of 2013. Expansion was held back by a 2.1 percent drop in investments and 0.1 percent decline in family consumption.

Consumer Prices

Brazil’s consumer prices in May rose 0.46 percent from the month prior, down from a 0.67 percent increase in April. Annual inflation (BZPIIPCY) jumped to 6.37 percent from 6.28 percent the month prior, marking the fastest pace since June.

Brazil’s inflation is under control, Rousseff said on June 10 in Brasilia, adding that the country has conditions to spur continuous growth. The central bank targets annual inflation of 4.5 percent, plus or minus two percentage points.

Central bankers on May 28 decided to hold the benchmark Selic unchanged at 11 percent after increasing borrowing costs by 375 basis points during the previous nine meetings. In an accompanying statement, policy makers said they decided “at this moment” not to move borrowing costs, and in the minutes to the meeting they cited falling confidence.

An Ibope survey published June 10 put Rousseff’s re-election support at 38 percent, down from 40 percent in a previous poll released on May 22. The survey of 2,002 people was conducted between June 4 and 7 and has a margin of error of plus or minus two percentage points.

To win the Oct. 5 first round, a candidate must have more than 50 percent of the vote, or more votes than all other contenders combined.