Electricity and gasoline prices rose in January, causing Brazil’s official inflation for the month of the year to close at 0.33 percent, the same level as in December. In January 2025, the rate was 0.16 percent.

With this result, official inflation—as gauged by the country’s consumer price index IPCA—has reached 4.44 percent over the past 12 months, thus within the government’s maximum tolerance limit.

Notícias relacionadas:

• Brazil’s inflation ends 2025 at 4.26%, within target.
• Brazil’s Central Bank keeps benchmark interest rate at 15% per annum.

Gasoline exerted the greatest upward pressure, accounting for 0.10 percentage points (p.p.) of the index, while cheaper electricity bills accounted for -0.11 p.p.

The data were released Tuesday (Feb. 10) by the statistics bureau IBGE.

Target

The inflation target set by the National Monetary Council (CMN) is three percent, with a tolerance of 1.5 percentage points above or below – i.e., a range of 1.5 to 4.5 percent. Since last November, the IPCA has been within the tolerance limit.

Since the beginning of 2025, the target assessment period has been the previous 12 months, rather than just the end of the year (December). The target is considered unmet if the tolerance range is exceeded for six consecutive months.

Index

The IPCA calculates the cost of living for families with incomes between one and 40 minimum wages. In total, prices are collected for 377 sub-items, including products and services, across ten metropolitan areas in the country.

Despite the decline in inflation and the dollar, Brazil’s Central Bank left interest rates unchanged. The Monetary Policy Committee (Copom) unanimously maintained the Selic rate, the economy’s basic interest rate, at 15 percent per year.

This is the fifth consecutive meeting at which Copom has maintained the basic interest rate. The rate is at its highest level since July 2006, when it stood at 15.25 percent per year.

Notícias relacionadas:

• Brazil’s inflation ends 2025 at 4.26%, within target.
• Brazilian economy expected to grow 2.44% in 2026 budget forecast.

In its statement, Copom signaled that it may begin to reduce interest rates at the March meeting, provided inflation remains under control and there are no surprises in the economic scenario.

“The Committee anticipates that, if the expected scenario is confirmed, it will begin easing monetary policy at its next meeting, but reiterates that it will maintain the appropriate restraint to ensure inflation converges to the target,” the Central Bank stated.

The Selic rate reached 15 percent per year at the June meeting last year and has remained at that level since.

Inflation

The Selic rate is the Central Bank’s main tool for curbing Brazil’s official inflation, as gauged by broad consumer price index IPCA. In 2025, the indicator stood at 4.26 percent, the lowest annual level since 2018. With this result, it returned to within the ceiling of the continuous inflation target.

Under the new continuous target system, in effect since January, the inflation target pursued by the Central Bank and defined by the National Monetary Council is 3 percent, with a tolerance range of 1.5 percentage points above or below. In other words, the lower limit is 1.5 percent and the upper limit is 4.5 percent.

In the continuous inflation targeting model, the target is calculated month by month, taking into account inflation built up over 12 months. In January 2026, inflation since February 2025 is compared with the target and the tolerance range. In February 2026, the procedure is repeated, with calculations starting in March 2025. In this way, the verification shifts over time and is no longer restricted to the December index of each year.