Brazil: Inflation inches up in January
Latest reading: Consumer prices rose 4.4% on a year-on-year basis in January, following a 4.3% increase in the previous month, moving closer to the upper bound of the Central Bank of Brazil (BCB)’s 1.5–4.5% tolerance band. January’s print was largely in line with market projections.
Relative to the prior month’s data, price pressures were higher for housing and utilities in January (+10.1% on a year-on-year basis vs +6.8% in December). In contrast, there were reduced price pressures for transportation (+2.4% vs +3.1% in December), food and beverages (+2.2% vs +2.9% in December), clothing (+4.9% vs +5.0% in December) and education (+6.0% vs +6.2% in December).
Meanwhile, core consumer prices increased 5.4% in annual terms in January, following a 5.1% increase in the prior month.
Finally, consumer prices rose 0.33% in January in month-on-month terms, unchanged from the prior month’s reading.
Outlook: Our Consensus is for inflation to wane from current levels in February–June, and our panelists see average inflation remaining within the Central Bank’s tolerance range for the foreseeable future.
In 2026 as a whole, our Consensus is for inflation to decelerate to a six-year low, kept in check by past tight monetary policy. Additionally, softer wage growth will act as another drag.
Upside risks to the inflationary outlook stem from extreme weather events, the evolving conflict in the Middle East and changes in domestic fiscal policy ahead of general elections in October.