Brazil: Inflation slows more than anticipated in October
Latest reading: Consumer prices rose 4.7% on a year-on-year basis in October, following a 5.2% increase in the previous month and moving closer to the upper bound of the Central Bank’s 1.5–4.5% tolerance band. October’s print marked a nine-month low and came in below market expectations.
Relative to the previous month’s data, there were milder price pressures for food and beverages (+5.5% on a year-on-year basis vs +6.6% in September) and housing and utilities (+4.4% vs +6.3% in September). In contrast, there were more notable price pressures for transportation (+3.7% vs +3.2% in September) and clothing (+5.1% vs +4.9% in September). Finally, the change in education prices was the same as in the prior month (+6.2% in October and September).
Meanwhile, core consumer prices increased 5.1% in annual terms in October, following a 5.6% rise in the previous month.
Lastly, consumer prices increased 0.09% in October on a month-on-month basis, following a 0.48% rise in the previous month.
Outlook: Our Consensus is for inflation to broadly stabilize in November–December before gradually easing until Q2 2026, at which point it should steady again through the end of the year.
Overall in 2026, inflation should ease to a six-year low and reenter the Central Bank’s tolerance band as a result of tight monetary policy and decelerating wage growth. That said, even at the end of our forecast horizon in 2030, inflation will remain above the 3.0% Central Bank target.
Upside risks stem from extreme weather hurting food and energy output, as well as changes in the government’s fiscal policy ahead of the October 2026 general election.