Brazil's annual inflation rate hit 10.8 percent in 2015, up from previous estimates and more than double the government target, the central bank said Wednesday.

The annualized rate is expected to remain above nine percent for the first quarter of 2016 before starting to drop, the bank said, amid deep recession in the world's seventh largest economy.

Brazil's economy is now thought to have shrunk by 3.6 percent over the year, more than the 2.7 percent forecast in September and the biggest annual drop in a quarter of a century.

The bank forecasts GDP will fall by another 1.9 percent in 2016, which would mean the economy will have shrunk for two consecutive years for the first time since 1931.

The central bank report attributed falling growth to a "macroeconomic adjustment" and "the effects of non-economic events."

These events would be the huge political and financial scandals that have rocked President Dilma Rousseff's left-wing government and the national oil firm Petrobras.

Rousseff is now the target of an impeachment investigation, accused of plugging holes in Brazil's public accounts by borrowing from state banks.