Brazil CPI Inflation Rate: Data, Forecast & Trends

As of April 2025, Brazil's official inflation rate, as measured by the Broad National Consumer Price Index (IPCA), stood at 5.53% on a year-on-year (YoY) basis. This represents a slight increase from 5.48% in March 2025 and is the highest rate since February 2023. This figure remains above the Central Bank of Brazil's (BCB) upper target tolerance range of 4.5% for the sixth consecutive month. The BCB's inflation target for 2025 is 3.0%, with a tolerance band of ±1.5 percentage points, meaning the upper limit is 4.5%. The persistent overshoot underscores the ongoing challenge faced by the monetary authority.

A detailed examination of the IPCA components reveals the areas exerting the most significant upward pressure on prices. In April 2025, the "Food and beverages" group was the largest contributor to inflation, rising by 7.81% YoY, accelerating from 7.68% in March. This was despite attempts by the Federal Government to remove food tariffs to tame inflation. Within this group, prices for potatoes (18.29%), tomatoes (14.32%), ground coffee (4.48%), and snacks (1.38%) saw notable increases. Conversely, rice prices fell by 4.19%.

"Health and personal care" was another significant contributor, increasing by 5.81% YoY in April. This was largely influenced by pharmaceuticals, which saw a 2.32% increase, following a government-authorized price adjustment of up to 5.09% on March 31. Personal hygiene items also contributed with a 1.09% rise.

"Housing and utilities" inflation accelerated to 4.00% YoY in April, up from 3.84% in March. This was despite a slight decrease in residential electricity prices (-0.08%) due to reductions in PIS/Cofins taxes in some regions. "Personal expenses" also saw an acceleration to 5.74% from 5.28% in March, driven by higher prices for cigarettes (2.71%) and banking services (0.87%). "Clothing" inflation increased to 4.01% from 3.53%.

In contrast, "Transportation" inflation slowed to 5.49% YoY in April from 6.05% in March. This deceleration was primarily due to a significant drop in airfare (-14.15%) and a decline in fuel prices (-0.45%), including diesel fuel (-1.27%), vehicular gas (-0.91%), ethanol (-0.82%), and gasoline (-0.35%). The reduction in diesel fuel prices at refineries and an improved ethanol harvest contributed to this trend.

On a month-on-month (MoM) basis, Brazil's IPCA increased by 0.43% in April 2025, following a 0.56% rise in March. This marks a deceleration in the monthly rate of increase.

The "Food and beverages" group continued to exert the largest impact on the monthly index, contributing 0.18 percentage points (p.p.), with a 0.82% MoM increase. This represents a deceleration from the 1.17% MoM increase seen in March.

"Health and personal care" also showed a significant monthly increase of 1.18%, contributing 0.16 p.p. to the overall index, mainly due to the adjustment in pharmaceutical prices. "Wearing apparel" registered a 1.02% MoM increase, influenced by new seasonal collections.

Conversely, "Transportation" was the only group to show a decline, falling by 0.38% MoM, primarily due to the sharp drop in airfares and a continued decrease in fuel prices. "Housing" decelerated to 0.14% MoM from 0.24% in March, with a slight drop in residential electricity.

Brazil's official inflation, measured by the Extended National Consumer Price Index (IPCA), concluded 2024 at 4.83%. This figure exceeded the central bank's target of 3% and also surpassed the upper tolerance limit of 4.5%. This marks a slight increase compared to the 4.62% recorded in 2023.

Several key factors contributed to this average inflation. The "Food and Beverages" category was the most significant driver, with a cumulative increase of 7.69% over the year, largely due to adverse weather conditions impacting various regions. Other notable contributions came from "Health and Personal Care" (6.09%) and "Transportation" (3.30%), with gasoline being a particular standout within the latter, rising by 9.71%. Together, these three groups accounted for roughly 65% of Brazil's inflation in 2024. Despite the overall rise, some items like airfares and certain fresh foods saw price reductions, helping to mitigate the overall increase. The persistent inflation above target suggests ongoing vigilance will be required from Brazil's monetary authorities.

Brazil's inflation history is marked by periods of hyperinflation, a stark contrast to the moderate inflation targets of developed economies. In the early 1990s, Brazil experienced extreme hyperinflation, with annual rates reaching staggering levels of well over 1,000%. The Plano Real (Real Plan) introduced in 1994, which pegged the Brazilian Real to the US Dollar and implemented strict fiscal measures, was instrumental in bringing inflation down dramatically.

Following the Real Plan, inflation stabilized significantly but remained volatile, often influenced by commodity cycles, exchange rate movements, and fiscal policy. In the late 1990s and early 2000s, annual inflation fluctuated between single digits and low double digits. The adoption of an inflation-targeting regime in 1999 by the Central Bank of Brazil provided a more structured framework for managing price stability, albeit with frequent target overshoots.

In the 2010s, inflation generally trended lower but still saw spikes. The COVID-19 pandemic and subsequent global supply chain disruptions, coupled with domestic factors like drought impacting food prices and electricity generation, led to a sharp resurgence in inflation, reaching 10.06% at the end of 2021. While inflation has moderated since, the current levels in 2025 indicate that the battle for sustained price stability is far from over.

As of April 2025, core inflation in Brazil—defined as inflation excluded fuel and some foods—was above 5%, and thus above the Central Bank's target. This means that even after stripping out the most volatile components, price pressures are still elevated. The persistence of inflation in services (which are typically less volatile and more indicative of domestic demand and wage dynamics) and pharmaceuticals, as seen in the latest component data, suggests that core inflation remains a concern.

The challenge for the BCB is that while global commodity prices have eased from their peaks, domestically driven inflation, often influenced by a strong labor market and persistent inflation expectations, has shown stickiness.

Several factors pose significant risks to Brazil's inflation outlook, making the BCB's task particularly challenging:

• Fiscal Risks and Public Debt: Brazil's high public debt, projected to reach 79.6% of GDP by 2028 from 76.5% in 2024, poses a substantial risk. The government's ability to achieve primary fiscal surpluses to stabilize debt remains a critical concern. Any perception of fiscal laxity or failure to meet fiscal targets can undermine market confidence, leading to a depreciation of the Brazilian Real and increased inflationary pressures through higher import costs. The Independent Fiscal Institute estimates that primary surpluses of 2.4% of GDP are needed for debt stabilization, which would require "inconceivable spending cuts" from the current administration.
• Exchange Rate Volatility: The Brazilian Real is highly sensitive to global and domestic economic conditions. A stronger U.S. dollar, potential increases in U.S. interest rates (due to "Trumponomics" or other global factors), or renewed domestic political uncertainty could trigger significant depreciation of the Real. A weaker currency directly fuels imported inflation, particularly for commodities priced in dollars. The BCB has intervened in foreign exchange markets in the past to support the Real, but sustained pressure could limit its ability to cut interest rates.
• Global Commodity Price Swings: Despite recent moderation, Brazil remains vulnerable to renewed spikes in global commodity prices, especially oil and food. As a major exporter and consumer of these commodities, fluctuations directly impact both its trade balance and domestic prices. Geopolitical tensions, such as ongoing conflicts in Eastern Europe or the Middle East, could easily disrupt supply chains and drive prices higher, leading to renewed cost-push inflation.
• Wage-Price Dynamics: A tight labor market and strong wage growth could exert upward pressure on services inflation. If firms pass on higher labor costs to consumers, it could lead to a self-reinforcing wage-price spiral, making inflation more entrenched and harder to bring down. While employment growth remains strong, the key risk is whether this translates into generalized price increases.
• Weakening Domestic Demand and Economic Activity: While strong private consumption, supported by social transfers, has driven recent GDP growth, there are nascent signs of moderation. Rising household debt and the impact of cumulative price increases on consumer purchasing power could lead to a slowdown in domestic demand. If the economy decelerates too sharply, it could create disinflationary pressures on one hand, but on the other, make it more challenging to balance growth with monetary tightening needed to combat persistent inflation.
• Political and Policy Uncertainty: Brazil's political landscape can significantly influence economic sentiment and policy direction. Upcoming elections or unexpected policy shifts could create uncertainty, affecting investor confidence, exchange rates, and thus inflation expectations. The Central Bank's independence, while strong, can still be subject to political pressures, particularly regarding the trade-off between inflation control and economic growth.

Brazil Inflation Data