Brazil records 0.32% deflation in August driven by energy and food prices

Brazil recorded a deflation of 0.32% in August 2026, according to the Broad National Consumer Price Index (IPCA) released by IBGE. This marks a significant drop from the 0.07% increase seen in July. The deflation was primarily driven by a 7.63% decrease in residential electricity prices, aided by the Itaipu bonus, and a reduction in food costs, specifically for items like potatoes, carrots, onions, and tomatoes.

While the monthly index fell, the 12-month accumulated inflation stands at 4.22%, remaining within the upper limit of the 4.5% target range. Other sectors saw varied movements, such as a 13.17% drop in airfares and a 19.59% increase in cigarette prices due to new federal taxation.

Economic analysts and the financial market are now monitoring these trends, with expectations that the Central Bank's Monetary Policy Committee (Copom) may consider reducing the Selic interest rate. Additionally, data shows a reduction in food insecurity among elderly households in Brazil, though 21.8% of households with elderly residents still face food instability.