Brazil’s IPCA-15 inflation index opened 2026 with a slower monthly increase, but the 12-month rate edged up to the upper bound of the official target range.
The development comes a day before the central bank’s interest rate decision and as markets weigh the start of monetary easing.
Data released on Tuesday by the Brazilian Institute of Geography and Statistics (IBGE) showed the National Consumer Price Index-15 rose 0.20% in January, easing from a 0.25% increase in December.
Despite the moderation on a month-to-month basis, 12-month inflation climbed to 4.50% in January from 4.41% a month earlier.
With a tolerance band of plus or minus 1.5 percentage points, the annual reading sits at the upper limit of Brazil’s 3.0% inflation target for the IPCA index.
Overall, the January figures were broadly in line with expectations.
A Reuters poll had forecast a monthly rise of 0.21% and a 12-month rate of 4.51%, leaving little surprise in the headline data as attention turns to the central bank’s policy guidance.
Focus on a Central Bank decision
The inflation data come ahead of the central bank’s next policy meeting, which begins on Tuesday, with a decision on the benchmark Selic rate due on Wednesday.
After a prolonged period of tight monetary policy, the central bank is widely expected to keep the Selic rate unchanged at 15%.
That stance helped bring inflation below the upper limit of the target range at the end of 2025, reinforcing the view that policymakers may now have scope to begin easing.
As a result, attention has shifted from whether rates will be adjusted immediately to signals on the timing of the first cuts.
The central bank’s latest Focus survey shows economists expect the first Selic rate reduction, of 50 basis points, to occur in March.
The same survey forecasts inflation at 4.0% and the benchmark interest rate at 12.25% by the end of 2026.
Food and health drive January pressures
Inflation dynamics in January showed diverging movements across major consumer groups, partly offsetting each other in the headline reading.
Declines in housing and transportation costs helped contain overall inflation, counterbalancing stronger pressure from food and beverages as well as health and personal care.
The Health and Personal Care group made the largest contribution to the January IPCA-15.
The category rose 0.81%, reversing a 0.01% decline in December, driven mainly by a 1.38% increase in personal hygiene products.
Food inflation also picked up at the start of the year. After seven consecutive months of declines, food consumed at home rose 0.21%.
As a result, the broader Food and Beverages group—which carries the largest weight in the index—accelerated to a 0.31% increase in January from 0.13% in December.
Key contributors included tomatoes, which rose 16.28%, potatoes up 12.74%, fruits up 1.65%, and meats up 1.32%.
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