Brazil Mid-Month Inflation Comes in Below Forecasts

Brazil's IPCA-15 consumer price index fell by 0.4% in August 2026, following a 0.06% rise in the previous period, slightly more than the expected 0.3% decrease. This marked the first drop in a year and the steepest since August 2022. Housing prices fell 1.41%, mainly driven by a 6.25% drop in residential electricity prices, which had the largest negative impact on the overall index. The decline reflected the Itaipu Bonus credited to electricity bills issued in August, while the yellow tariff remained in effect. Further downward pressure came from transportation and food, with prices falling 1% and 0.57%, respectively, amid cheaper airfares and fuels and declines in key food items such as tomatoes, potatoes, carrots and ground coffee. Conversely, prices increased the most for personal expenses (+0.66%), driven by higher cigarette prices, and education (+0.46%). Yearly, the IPCA-15 inflation fell to 4.24% from 4.52% previously, below the market consensus of 4.34%.

Consumer prices in Brazil rose 0.06% in the month to mid-July 2026, slowing sharply from 0.41% in June and coming in below forecasts of 0.2%. The reading marked the lowest mid-month inflation rate since August 2025. Food and beverage prices provided the largest downward contribution, falling 0.66%. Food consumed at home dropped 1.14%, while food away from home accelerated to 0.55%. Housing was the main source of inflationary pressure, rising 0.97%, driven by a 3.03% increase in residential electricity prices following the introduction of the yellow tariff flag and regulated tariff adjustments in several cities. Transportation prices rose 0.11%, as an 11.7% jump in airfares more than offset lower fuel prices amid easing concerns over the Middle East oil supply crisis. Health and personal care costs increased 0.28%, led by higher personal hygiene product prices. The 12-month inflation rate eased to 4.52% from 4.58% in June.

Consumer prices in Brazil rose 0.41% month-over-month in the month to mid-June 2026, slowing from 0.62% in mid-May and coming in slightly below forecasts of 0.44%. Cost of food and beverages eased to 0.74% from 1.38%, as prices of food consumed at home decelerated to 0.87% from 1.73%. Housing inflation also fell to 0.72% from 1.03% in May. In health and personal care, prices rose 0.47%, easing from 1.05% in the previous month. Transportation fell 0.03% after declining 0.33% in May, as lower fuel prices offset increases in airfares and public transportation. Regionally, Brasília posted the highest increase at 0.93%, driven by airfares and gasoline, while Rio de Janeiro, Curitiba, and Salvador recorded the lowest readings at 0.28%. Mid-month inflation reached 3.45% year-to-date and 4.80% over the last 12 months.