Key facts
- Brazil's annual inflation slowed to 4.24% in the 12 months through mid-August.
- Consumer prices fell 0.40% month-on-month, the first decline since August 2025.
- Lower housing, transportation, and food prices contributed to the monthly decrease.
- The central bank's benchmark interest rate was cut by 25 basis points to 14%.
Brazil's annual inflation slowed more than expected in the 12 months through mid-August, as consumer prices posted their first monthly decline in a year, reinforcing signs that price pressures are easing in Latin America's largest economy. The IPCA-15 consumer price index rose 4.24% in the 12 months through mid-August, according to statistics agency IBGE. This figure was down from 4.52% in the previous month and below the 4.34% median forecast in a Reuters poll of economists. On a monthly basis, prices fell 0.40%, the first negative reading since August 2025 and below the median forecast of a 0.30% decline. Annual inflation remains within the central bank's target range of 3%, plus or minus 1.5 percentage points. The central bank cut its benchmark interest rate by 25 basis points to 14% this month, marking the fourth consecutive rate cut, and left the door open for further easing as inflation moderates and economic activity cools. The central bank's next policy meeting is scheduled for September 15-16. The monthly IPCA-15 drop was driven mainly by lower housing, transportation, and food prices. Housing costs fell 1.41%, led by lower electricity bills due to a one-off discount tied to the Itaipu hydroelectric dam's results. Transportation prices dropped 1%, reflecting cheaper air fares and fuel, while food and beverage costs fell 0.57%.