Brazil’s inflation drops to 0.07% in July, returns to target
Food prices fell in July, helping Brazil’s official inflation lose momentum for the fourth consecutive month and close at 0.07 percent. This brings the country’s consumer price index IPCA to a 12-month cumulative rate of 4.44 percent, back in line with the government’s target.
The rate for July was consistent with financial market estimates. Monday’s (Aug. 10) Focus readout – a Central Bank survey of economic institutions – projected that July inflation would come in at 0.07 percent. By the end of 2026, the market expects the IPCA to stand at 5.02 percent.
The official inflation figures for 2026 are as follows:
- January – 0.33%;
- February – 0.70%;
- March – 0.88%;
- April – 0.67%;
- May – 0.58%;
- June – 0.16%;
- July – 0.07%.
The data were released Tuesday (11) by the statistics bureau IBGE.
Within the target range
Price trends have brought the 12-month cumulative rate (4.44%) back within the government’s target range – three percent, with a tolerance of 1.5 percentage points above or below, that is, a range of 1.5 to 4.5 percent.
Since the beginning of 2025, the target assessment period has covered the immediately preceding 12 months, rather than just the figure reached at the end of the year (December). The target is considered unmet if inflation exceeds the tolerance range for six consecutive months.
July
July’s result was the lowest since August 2025, when the IPCA stood at 0.11 percent. Considering only the month of July, last month’s performance was the lowest since 2022 (-0.68%). For the second consecutive month, the food and beverages group – which carries the greatest weight in Brazilian households’ shopping baskets – showed deflation (-0.14 percentage points). In June, the decline was 0.24 percent.
The survey’s analyst, Fernando Gonçalves, notes that the lower food prices reflect a greater supply of products, driven by favorable weather conditions. “The weather has become more favorable,” he said.
The index
The IPCA measures the cost of living for households with incomes ranging from one to 40 minimum wages. In total, prices are collected for 377 sub-items, including goods and services. Price data are collected in ten metropolitan areas, including those of São Paulo and Rio de Janeiro.
