Brazil’s 2025 Inflation Closes at 4.26%, Within Target Band

Overview

• Consumer prices rose 0.33% in December as the IPCA ended 2025 at 4.26%, the lowest annual rate since 2018 and the first year within the tolerance range since 2019.
• Residential electricity climbed 12.31% and was the single largest contributor to the index, with ten items accounting for 54.7% of the annual rise.
• Services inflation accelerated to 6.01% in 2025, outpacing the headline rate and signaling persistent pressure in categories such as airfares, app-based transport and rent.
• Food and beverages rose 2.95% for the year, aided by a record harvest, a softer dollar and lower commodity prices, which helped contain the overall index.
• The INPC reached 3.90%, implying below-IPCA adjustments for most pensions, while the new R$1,621 minimum wage raises payroll-loan limits, likely supporting credit demand.