Brazil’s Inflation Hits Six-Year Low as Public Perception Remains Deeply Split, New Data Shows

Brazil posted its lowest November inflation rate since 2018, signaling positive momentum for the economy, but new survey data reveals a country sharply divided between optimism and financial stress.

Brazil’s official inflation index (IPCA) rose 0.18% in November, slightly below market expectations and marking the lowest figure for the month in six years. Year-to-date inflation reached 3.92%, while the 12-month rate stood at 4.46%, safely under the central bank’s 4.50% upper target. Economists view the result as one of the most encouraging signs for price stability in 2024.

The main drivers of inflation remain non-tradable services, such as education, health care, haircuts, and parking, sectors heated by a historically tight labor market. Brazil’s unemployment rate is now 5.4%, its lowest level in years. Meanwhile, inflation for tradable goods continues to ease, supported by a stronger Brazilian real earlier in the year and six consecutive months of falling in-home food prices.

Still, political volatility has weighed on financial assets. Discussions around a potential presidential bid by Flávio Bolsonaro triggered a sharp reaction in markets: the exchange rate jumped from R$5.30 to R$5.50, and long-term interest rates spiked. A weaker currency increases the cost of imported goods, potentially pressuring inflation in 2025.

Upcoming decisions from the Brazilian central bank’s COPOM and the U.S. Federal Reserve add more uncertainty. A possible Fed rate cut, expected at 0.25 percentage points, may weaken the U.S. dollar and reduce the massive interest rate gap between the two countries, a shift widely viewed as favorable for Brazil.

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Survey Reveals a Country Split Between Anxiety and Optimism

New findings from the Ipsos Cost of Living Monitor 2025 highlight the paradox of Brazilian public sentiment.

According to the survey, 35% of Brazilians say they are in a difficult or very difficult financial situation, well above the global average of 27%. Yet the same 35% believe their income will increase next year, making Brazilians more optimistic than most of the world.

The divergence between perception and economic indicators is striking. Brazil is the only country among the 30 surveyed where the population blames high interest rates, not global conditions or national policies, for personal financial hardship. This reflects a cultural reality: Brazilians strongly associate financial pressure with the cost of installment plans and consumer credit.

Confusion over broader economic conditions is also clear. 36% of Brazilians believe the country is in a recession, even though Brazil has not entered a technical recession since 2020. Meanwhile, 66% expect interest rates to rise next year, despite forecasts showing the opposite.

Brazil’s unemployment rate stood at 5.6% in the three-month period ending in September, according to the IBGE’s continuous household survey. This marks the third consecutive quarter at 5.6%, matching the lowest rate ever recorded since the indicator began in 2002. A year earlier, the rate was 6.4%.

In total, 6.45 million people were unemployed, the lowest level in the historical series. This represents a 3.3% drop compared to the previous quarter and an 11.8% decrease relative to the same period in 2024. The IBGE also reported a record number of formal jobs, with 39.2 million workers holding signed work contracts.

Total real income reached R$ 354.6 billion, another record, with 5.5% annual growth.

These record lows in unemployment levels, record income, and record formal employment contrasts with earlier predictions that Brazil was heading toward an economic “abyss.” Those predictions, made by economists mostly linked to the Brazilian financial market and also to the country's right-wing candidates, especially those who want Tarcísio de Freitas as president in 2027, have been getting their predictions about the country wrong for years. In this case, 2025 was no different.

The year of 2025 in Brazil was marked by stock market highs, a stable exchange rate, and criticism of political narratives that predict national collapse of an economy that is functioning reasonably well.

Thus, the Ipsos survey indicates that this blend of caution and hope reveals a deeper pattern: Brazilians often expect the macroeconomy to worsen — perhaps because they spend the entire year listening to catastrophic predictions for the national economy in the mainstream media —, even as they believe their own lives will improve. But until lower interest rates and tax changes show up — the country implemented a major tax reform this year — in household budgets, the gap between perception and economic data is likely to persist. 

Cost of living in Brazil: September inflation of 1.16% is the highest for the month since 1994, the beginning of the Real Plan; in 12 months, IPCA accumulates high of 10.25%

Although the brazilian index IPCA (Broad National Consumer Price Index), that shows the inflation rate was 1.16%, the highest for the month since 1994. It was below the expectation of 1.25% of the financial market. In the real live, the cost of living in Brazil continues to grow alarmingly.

Much of the IPCA in September was driven by energy and fuel prices.

As the increase in the electricity tariff was what most influenced the index. It is possible to say that inflation was less spread to food products. However, in 2021, Brazil reached the terrible mark of 7.5 million Brazilians living under severe food insecurity, and more than 19 million people living in extreme poverty

Cost of living in Brazil: January inflation is 0.21%, the lowest for January since the beginning of the Real Plan, in 1994

According to IBGE, the official inflation in Brazil, as measured by the Broad National Consumer Price Index (IPCA), decelerated to 0.21% in January of 2019, after registering an increase of 1.15% in December 2018. It is the lowest result for a month in January since the beginning of the Real Plan, in July 1994. In the accumulated of the last 12 months, the indicator registered 4.19%.

For economist Monica de Bolle, director of Latin American studies and emerging markets at Johns Hopkins University, "Brazil is experiencing a 'tropical version' of secular stagnation, with a stagnant economy, without reacting, and registering inflation contained below the target. It is not yet known what effect a reduction in interest rates could have on the economy in the current scenario".

To make matters worse, according to the International Monetary Fund (IMF), economic activity in Latin America and the Caribbean was stagnant in 2019, making it more challenging to resume growth in the region. The inflation figure for January in Brazil points to a certain stagnation remaining.

According to the IMF report, Brazil may grow by 2.2% this year and 2.3% in 2021 in the Gross Domestic Product (GDP). However, after the emergence of coronavirus cases in Wuhan, China, Brazil's main trading partner, these figures are being revised downwards by the Brazilian financial market.

Cost of living in Brazil: the country has deflation of 0.04% in September 2019

According to data from the Broad National Consumer Price Index (IPCA), released today by the IBGE, Brazil had, in September, a deflation of 0.04%. This is the lowest result for this month since 1998.

The main factors for this number were the fall in the cost of food away from home, which fell 0.53%, and the fall in the cost of food at home, which fell 0.70%. There was also a fall in-home appliance prices, which was 2.26%, and on TV, sound and computer prices, which was 0.90%.

The National Index of Construction (Sinapi), also released today by the IBGE, grew 0.37% in September. The main reason for the increase was the cost of labor.

The Regional Monthly Industrial Survey, also released today by the IBGE, indicates that after three months of negative rates, the São Paulo industry, the largest in Brazil, grew 2.6% in August, influenced by the increase in sugar production.

Cost of living in Brazil: inflation was 0,11% in August, according to IBGE

According to data from the Extended National Consumer Price Index (IPCA), released today by the IBGE, August inflation in Brazil slowed to 0.11%, after registering high of 0.19% in July.

The IBGE indicated a deflation in the Food & Beverage (-0.35%) and Transport (-0.39%) groups. Housing, with a high of 1.19%, was the group that positively pressured inflation. Thus, official inflation in Brazil was 0.11% in August and 3.43% in the last 12 months.

According to data from the National Association of Automotive Vehicle Manufacturers (Anfavea), vehicle production in Brazil fell 7.3% in August. Industry exports plunged 34.6% in August 2019 compared to August 2018.  This result was greatly impacted by the crisis in Argentina, the largest buyer of cars produced in Brazil.

This scenario, coupled with the very weak performance of the Brazilian economy, reinforces the idea that 2019 may have a negative GDP in Brazil.

Cost of living in Brazil: IPCA grows only 0.19% in July

According to the IBGE, the July Extended National Consumer Price Index (IPCA) varied 0.19%, 0.18 percentage points (pp) above the June result (0.01%). This was the lowest IPCA for the month of July since 2014, when it stood at 0.01%. The accumulated variation in the year was 2.42% and, compared to the last 12 months, the index fell to 3.22%, below the 3.37% recorded in the immediately preceding 12 months. In July 2018, the rate was 0.33%.

The sector that had the biggest increase in prices was housing, whose variation was 1.20%. The reason for this increase was the increase in electricity prices, which, on average, was 4.48% more expensive. Food and beverages were virtually unchanged, with prices rising by 0.01%.

In the accumulated 12-month period through July, the IPCA increased by 3.22%, against 3.37% in the previous month. Reuters poll pointed out analyst expectations were up 0.24% in July, accumulating 12-month advance of 3.28%

Cost of living in Brazil: inflation slows down in May 2019

According to IBGE, official inflation in Brazil slowed down to 0.13% in May 2019. It is the lowest result for May since 2006 (when the index was 0.10%) and the lowest monthly index of the year. In 12 months, accumulated Extended Consumer Price Index (IPCA) declined to 4.66% but remains above the center of the target set by the government for 2019, which is 4.25%. The exchange rate returned below R$ 4.00 and economic growth is still stagnant. This leads many analysts to bet on an interest rate cut by the Brazilian Central Bank.

The fall in the index was influenced by the deflation of 0.56% in the price of food and beverages. On the other hand, raised housing prices, which rose 0.98%. Health and personal care were also villains in the month, up 0.59%. Fuel expenses also weighed more on Brazilian families' pockets in May. Gasoline, for example, increased 2.60% in the period.

Brazil: inflation higher than expected by the government

Inflation in Brazil continues to rise, reaching 4.94% per year and getting distance from the center of the official target for 2019, which is 4.25%.

According to the IBGE, the Broad National Consumer Price Index (IPCA), considered the country's official inflation, stood at 0.57% in April 2019. This is the highest rate for a month in April since 2016 when the index was 0.61%.

When it reached 4.94%, the accumulated in 12 months exceeded the central inflation target of 4.25% set by the National Monetary Council (CMN).

The rise in the price of medicines was one of the main reasons for the growth of inflation in Brazil. The upward trend in inflation in Brazil is expected to continue higher due to the 3.43% increase in the price of the gas cylinder, authorized by Petrobras and in effect since 5 of May, and also by the increase in the price of energy consumption.

Cost of living in Brazil: beans and potatoes

The rice and beans dish is a combination consumed daily by Brazilians. This dish is now more expensive because beans are now more expensive.

According to the Broad Consumer Price Index (Índice Nacional de Preços ao Consumidor Amplo 15 - IPCA-15), the price of this basic item, which had already registered a 34.56% increase in February, rose 41.44% in March.

This was one of the reasons for the IPCA-E, which is the IPCA-15 accumulated quarterly, to be 1.18%, above the rate of 0.87% registered in the same period of 2018.

Another item that also had a price increase was the potato. The kilo of this product rose 12.39% in February and 25.59% in March.

As a result, previous official inflation in March (IPCA-15) showed a 0.54% increase in prices in relation to the previous month

Cost of living in Brazil in 2019

Inflation has rebounded in Brazil. According to the Brazilian Institute of Geography and Statistics (IBGE), official inflation accelerated to 0.43% in February 2019.

High food prices and school fees were the main factors for the month's high. In 12 months, the accumulated IPCA (National Wide Consumer Price Index) rose to 3.89%. Despite this rise in prices, inflation is below the government's target for 2019: 4.25%.

According to Fábio Romão, an economist at LCA Consultores, fuel prices are expected to pull up in inflation now in March.

The constant crisis produced by the current government and the possible difficulty to approve a profound Pension Reform may make a more moderate inflation picture unlikely.