Brazil: Inflation ebbs to 16-month low in December
Latest reading: Consumer prices rose 4.3% on a year-on-year basis in December, following a 4.5% rise in the previous month. December’s reading was the weakest since August 2024 and in line with market expectations. As a result, 2025 inflation came in at a three-year high of 5.0% (2024: 4.4%).
Relative to the prior month’s data, there were milder price pressures for food and beverages (+2.9% in annual terms vs +3.9% in November), clothing (+5.0% vs +5.7% in November) and education (+6.2% vs +6.3% in November). In contrast, there were more notable price pressures for transportation (+3.1% vs +3.0% in November) and housing and utilities (+6.8% vs +6.6% in November).
Meanwhile, core consumer prices rose 5.1% on a year-on-year basis in December, following a 5.2% rise in the previous month.
Finally, consumer prices rose 0.33% in December on a month-on-month basis, following a 0.18% rise in the prior month.
Outlook: Our panelists expect average inflation to gradually ease further in H1 2026, before picking up slightly again in H2 2026, while remaining within the Central Bank’s 1.5–4.5% tolerance band.
Overall in 2026, our Consensus is for inflation to wane to a six-year low as economic activity cools: High borrowing costs, coupled with softer wage growth, will keep private consumption growth weak this year despite a still-strong labor market. Upside risks to inflation stem from extreme weather events and changes in fiscal policy ahead of the general elections in October 2026.
Looking further ahead, inflation is set to remain above the 3.0% midpoint of the target throughout our forecast horizon to 2030, while remaining within the tolerance band of the target.