Brazil October Inflation Slows as Markets Eye Rate Decision

The Brazilian Institute of Geography and Statistics reported that the consumer price index rose 0.14% in October 2026, a significant slowdown from the 0.82% increase seen in September. This figure fell below the 0.26% forecast by economists. The decline was primarily driven by a 9.21% drop in air fares and a 1.92% decrease in household electricity bills, though food and beverage prices rose 1.04%, led by sharp increases in tomatoes and onions.

Despite the monthly slowdown, the 12-month inflation rate edged up to 4.63%, surpassing the 4.5% ceiling of the central bank's target range. This annual trend follows a period of market volatility, with the Ibovespa falling 16.83% over 20 sessions and the Brazilian real trading near a 12-month high of 5.59 against the US dollar. In corporate news, state-controlled Banco do Brasil reported a 66.5% drop in third-quarter profit to R$1.3 billion and lowered its 2026 profit guidance.

These figures are critical for the Copom, the rate-setting committee of the Central Bank of Brazil. The committee paused interest rate cuts on November 4, holding the Selic rate at 13.75% due to rising inflation expectations. Investors are now analyzing whether the lower monthly inflation will encourage the committee to resume cuts during its next meeting on December 8 and 9, or if the breach of the annual target ceiling will support a continued pause.