Brazilian inflation in August drops slightly but remains above target
Within the IPCA basket, notable declines came from gasoline (-0.94%) and electricity (-4.21%).
Brazil’s official consumer inflation index (IPCA) fell 0.11% in August, the Brazilian Institute of Geography and Statistics (IBGE) reported last week. This was the first negative reading since August 2024 and the sharpest drop since September 2022, when inflation fell 0.29%.
With August’s result, inflation reached 5.13% over the past 12 months, compared with 5.23% in July. In eight months consumer prices have risen 3.15%.
The 12-month result remains above the Central Bank’s inflation target of 3% for 2025 and outside the tolerance band of plus or minus 1.5 percentage points.
Among the nine spending categories tracked by the IPCA, food and beverages deepened their decline from July to August (from -0.27% to -0.46%), while housing costs reversed direction (from +0.91% to -0.90%). Household goods also moved into negative territory (from +0.09% to -0.09%), as did transportation (from +0.35% to -0.27%). Personal expenses slowed their pace of increase (from +0.76% to +0.40%).
Clothing entered into positive territory (from -0.54% to +0.72%), while stronger increases were recorded in health and personal care (from +0.45% to +0.54%) and education (from +0.02% to +0.75%). Communication remained unchanged (-0.09%).
Within the IPCA basket, notable declines came from gasoline (-0.94%) and electricity (-4.21%). Electricity had the single largest downward impact on the August index, reducing the overall figure by 0.17 percentage point.
IBGE Calculates Official Inflation Based on the Consumption Basket of Households Earning Between One and 40 Minimum Wages, Covering 10 Metropolitan Regions As Well As Goiânia, Campo Grande, Rio Branco, Sao Luis, Aracaju, and Brasilia.