Underlying inflation pressure eases gradually in 2026
The Core Consumer Price Index-Brazil (Core IPC-Br) is designed to provide a cleaner view of underlying consumer inflation by reducing the influence of more volatile price movements. Viewed over 12 months, the measure helps identify whether inflation pressure is becoming more persistent, easing, or reaccelerating beneath short-term fluctuations in headline prices.
Recent dynamics
Core inflation increased gradually during the first half of 2025, rising from 4.02% in January to 4.56% in May. It then remained close to 4.55% through August before beginning to ease, falling to 4.40% in September and 4.35% in October. The rate ended 2025 at 4.39%, indicating that the earlier acceleration had largely stabilized by year-end.
The easing process became more visible at the start of 2026. Core inflation stood at 4.43% in January, declined to 4.21% in February, 4.12% in March, and reached 4.05% in April. From January to April, the 12-month rate therefore fell by about 0.37 percentage point.
The decline was interrupted by a modest rebound in the following two months, with core inflation increasing to 4.12% in May and 4.20% in June. That increase remained limited, however, and the rate moved back down to 4.12% in July. The latest reading was approximately 0.44 percentage point below the 4.55% recorded in July 2025.
Interpretation and economic signal
The main signal in 2026 is one of gradual core disinflation rather than renewed persistent acceleration. The decline from January through April was followed by only a partial rebound in May and June, and July reversed part of that increase. This leaves underlying inflation below both its early-2026 level and the rates observed during the middle of 2025.
The magnitude of the recent movements is also relatively contained. Core inflation increased by about 0.15 percentage point from the April low of 4.05% to 4.20% in June, before declining by roughly 0.08 percentage point in July. The rebound therefore did not restore the higher inflation rates that prevailed during much of 2025.
Because core measures are intended to filter some of the volatility present in headline inflation, the moderation in the 12-month rate is particularly relevant for assessing persistence. A sustained movement lower would indicate that underlying price pressure is becoming less intense, while a renewed sequence of increases would signal that the disinflation process is losing traction.
As with other rolling 12-month inflation measures, the path can also be influenced by base effects as older monthly observations leave the calculation. Even so, the comparison between July 2025 and July 2026 points to a measurable reduction in underlying inflation pressure over the past year.
Conclusion
Core IPC-Br inflation entered 2026 near 4.43%, eased steadily to 4.05% in April, and then experienced a limited rebound before returning to 4.12% in July. The latest rate remains above the April low, but below the June rebound peak of 4.20% and materially below the 4.55% recorded in July 2025.
The current signal is therefore one of gradual improvement in underlying inflation, with some short-term stickiness but no clear evidence in the latest data of a sustained reacceleration. Continued readings near or below the current level would strengthen the evidence that core inflation pressure is slowly moderating.