Brazil's Inflation Ticks Up, Above Target for Sixth Month in a Row

Brazil's annual inflation rose to 5.35% in June, above the target of 5.30%, marking the sixth consecutive month of misses. Central bankers lifted the benchmark Selic to 15%, but efforts to control inflation are complicated by a hot jobs market and elevated public spending. The central bank will provide a public explanation for the miss and an expected horizon for price-increases to converge with the target.

Brazil's annual inflation rose to 5.35% in June, surpassing the target of 5.30%, marking the sixth consecutive month of misses. The consumer price index (CPI) accelerated from 5.10% in May to 5.35% in June [1]. This development comes as the central bank led by Gabriel Galipolo continues its aggressive stance against cost-of-living increases.

The central bank lifted the benchmark Selic rate to a nearly two-decade high of 15% in June, signaling a pause in its months-long monetary tightening campaign. However, the efforts to control inflation are being complicated by a hot jobs market and elevated levels of public spending, which are feeding price pressures [1].

The Brazilian government adopted a rolling target of 3% for annual inflation, with a tolerance range plus or minus 1.5 percentage points. The central bank is required to provide a public explanation when it misses its goal for six months, along with an expected horizon for price-increases to converge with the target. While the central bank has often failed to hit its inflation goal in recent years, the latest miss adds to the list of challenges facing Galipolo, an ally of President Luiz Inacio Lula da Silva [1].

Galipolo's resolve to cool prices is likely to be tested further as Lula gears up for a tough reelection fight next year. Analysts say markets will be attentive to the inflation explanation issued by the central bank's board of directors, known as Copom, for an indication of its plans as forecasts for price increases remain elevated for the foreseeable future [1].

References:
[1] https://www.bloomberg.com/news/articles/2025-07-10/brazil-inflation-ticks-up-missing-goal-for-sixth-straight-month