Brazil Inflation Stays Above BCB Target

The annual inflation rate in Brazil slowed to 3.81% in February 2026, the lowest since April 2024, down from 4.44% in January and compared to forecasts of 3.77%. The slowdown was mainly driven by softer price increases for food and beverages (1.8% vs. 2.2% in January) and housing (5.7% vs. 10.0%), particularly electricity prices, which rose 9.4% compared with 27.3% in the previous month due to base effects. In contrast, price pressures strengthened for transportation (2.5% vs. 2.4%), health care (5.7% vs. 5.6%), personal expenses (6% vs. 5.8%), and education (6.5% vs. 6%). Compared with the previous month, the CPI rose 0.7%, marking the largest monthly increase in a year. The main upward pressure came from education (5.21%) and transportation (0.74%). Within education, regular courses increased 6.2%, reflecting the price adjustments typically applied at the start of the academic year. In transportation, airfares surged 11.4%.

Brazil’s CPI rose 4.44% year-on-year in January 2026, up from 4.26% in December and broadly in line with market expectations of 4.43%. Price pressures were strongest in housing (10.06%), education (5.97%), personal expenses (5.76%), healthcare (5.59%), and clothing (4.88%). Meanwhile, the mildest inflation rates were recorded in household articles (0.01%), communication (1.78%), food and beverages (2.20%), and transport (2.36%). On a monthly basis, consumer prices increased 0.33% in January, the same as in December and compared to forecasts of 0.32%. The largest upward pressure came from transport prices, which rose 0.6%, driven mainly by increases in gasoline prices (2.06%) and city bus fares (5.14%). Communication prices also climbed sharply, rising 0.82%, led by higher telephone prices (2.61%).

Brazil’s annual inflation rate eased to 4.26% in December 2025 from 4.46% in November, marking the lowest reading since August 2024 and coming slightly below market expectations of 4.30%. Price pressures were strongest in housing (6.79%), followed by education (6.22%), personal expenses (5.87%), and health and personal care (5.59%). Food and beverages inflation slowed notably to 2.95% from 3.88% in November. Residential electricity prices jumped 12.31% in 2025, representing the single largest subitem impact, amid tariff adjustments and the application of all tariff flags throughout the year. In contrast, household articles recorded deflation (-0.28%). On a monthly basis, consumer prices rose 0.33% in December, accelerating from 0.18% in the prior month but remaining slightly below forecasts of 0.35%.