Brazil 12-month inflation seen at 4.65%; prior 4.68%

Brazil 12-month inflation seen at 4.65%; prior 4.68%

Brazil's annual inflation rate inched up to 5.35% in June 2025, marking the ninth consecutive month above the central bank's 4.5% target ceiling [1]. The National Institute of Geography and Statistics (IBGE) reported that inflation accelerated in several categories, including transport (5.11% vs 4.64%), housing (5.30% vs 4.53%), communication (2.16% vs 1.96%), and clothing (4.68% vs 3.92%). However, price growth slowed for food (6.66% vs 7.33%), healthcare (5.16% vs 5.66%), personal expenses (5.81% vs 5.87%), education (6.21% vs 6.27%), and household items (2.66% vs 2.77%).

On a monthly basis, consumer prices rose 0.24% in June, slightly down from 0.26% in May. The implementation of the Red Flag Level 1 tariff in June, adding BRL 4.46 to electricity bills for every 100 kWh consumed, contributed significantly to the upward pressure on residential electricity prices, which increased by 2.96% [1].

According to a Reuters poll, Brazil's monthly inflation is expected to have slowed for the fourth time in a row in June, driven by lower gasoline prices [2]. The IPCA consumer price index is forecast to have risen 0.20% in June after a 0.26% increase in May, according to the median estimate of 19 economists polled July 2-7. However, on a year-on-year basis, inflation remained high at 5.32%, well above the government's target.

The governor of Banco Central do Brasil (BCB) reiterated the need for restrictive interest rates to meet inflation targets, and the finance minister suggested that this could happen at some point next year. The latest weekly BCB poll among economists estimates inflation at the end of 2025 and next year to be 5.18% and 4.50%, respectively, but the projection for 2026 remains far from the main 3% objective [2].

References:
[1] https://www.tradingview.com/news/te_news:469292:0-brazil-inflation-rises-in-june/
[2] https://www.marketscreener.com/quote/index/S-P-GSCI-UNLEADED-GASOLIN-46869158/news/Brazil-s-monthly-inflation-forecast-to-have-slowed-further-in-June-50470003/