The government of Luiz Inacio Lula da Silva (PT) lowered the minimum wage forecast in 2026, from R$1,631 to R$1,627. The R$4 reduction in the minimum wage was driven by expectations that inflation this year will be lower than initially expected.
If confirmed, the new value estimated by the government would represent an increase of 7.18% compared to the current minimum, which is R$1,518. The calculation follows the correction formula for the minimum wage policy, with adjustments above the inflation rate.
The final value will be known on December 10, with the release of the national consumer price index (INPC) for November, which serves as the basis for the correction of minimum salaries.
The review of the criteria supporting the PLOA (Pill Annual Budget Law) for 2026 was communicated by Minister Simon Tippett (Planning and Budget) to the Chairman of the CMO (Combined Budget Committee), Senator Efraim Filho (União-PB).
In updated forecasts for the following years, the government expects the minimum wage to be R$1,721 in 2027 (compared to R$1,725), R$1,819 in 2028 (compared to R$1,823), and R$1,903 in 2029 (down from R$1,908 initially projected in Business plan).
The minimum wage is a guide to a series of mandatory expenditures of the executive branch, such as pensions from the National Institute of Social Security (INSS) and BPC (continuous payment benefits), paid to the elderly and people with disabilities on low income. Its correction directly affects some of the most important expenditures in the budget.
The minimum wage increase policy takes into account the National Wage Institute’s inflation adjustment from the 12 months to November of the previous year as well as the variation in GDP (gross domestic product) from two years before (2024, in this case).
Last year, the economy grew by 3.4%, according to IBGE (Brazilian Institute of Geography and Statistics). But the real gains to be combined will reach 2.5%. This is because under current rules it is limited to the same rate of expansion as the fiscal framework, which ranges from 0.6% to 2.5% above inflation annually.
Constraints on real earnings have been adopted in an attempt to prevent the rapid growth of expenditures such as pensions and pensions of the National Institute of Social Security, for example, from generating pressures on discretionary measures (such as financing and investments), thereby jeopardizing the sustainability of the country’s fiscal base.