SAO PAULO - Official statistics released on Tuesday showed Brazil's mid-April inflation climbed, but by less than economists had forecast, supporting expectations that the central bank will move again to ease policy later this week.
The consumer price index IPCA-15 recorded an annual rate of 4.37% for the period, up from 3.90% in the previous month, the statistics agency IBGE reported. That outcome fell short of the 4.49% projection compiled in a Reuters poll of economists.
On a monthly basis to mid-April, consumer prices rose 0.89%, the agency said. Although that was the largest monthly increase for the IPCA-15 since February 2025, it did not reach the 1.0% monthly rise expected in the Reuters poll. IBGE attributed the bulk of the monthly advance to higher prices in food and beverages and in transportation.
Fuel costs were singled out as a significant contributor to transportation inflation, with IBGE noting a jump in fuel prices that IBGE linked to rising global oil prices related to the Middle East conflict.
Markets have priced in a further reduction in the policy rate. The central bank is widely expected to cut its benchmark Selic rate by 25 basis points to 14.50% at its Wednesday meeting, after initiating an easing cycle last month. Policymakers face the task of balancing ongoing inflation pressures with a sluggish economy as they adjust monetary policy.
The central bank's inflation target stands at 3.0%, plus or minus 1.5 percentage points. Commenting on the outlook for policy, Kimberley Sperrfechter, senior emerging markets economist at Capital Economics, said: "We think that the easing in underlying price pressures and very high real interest rates should give the central bank room to deliver another 25bp cut."
Implications for markets and sectors are already apparent in the data flow. The softer-than-expected IPCA-15 print supports expectations for easier monetary policy, a factor closely watched by fixed-income markets, banks and other interest-rate-sensitive sectors. At the same time, the monthly uptick driven by food, beverages and transportation underscores price pressures in consumer staples and the transport sector, where fuel costs have an outsized influence.
Policymakers will take these signals into account as they weigh the next step in the easing cycle and monitor whether recent rises in global oil prices feed through to broader inflation in the months ahead.