Brazil Lower Than Expected Jul IPCA 15

Economics Research 28 July 2026 | 9:12AM EDT

Brazil: Lower Than Expected Jul IPCA-15; Declining Food & Fuel Prices (Ramos)

Bottom line: The Jul IPCA-15 printed at a lower than expected 0.06% mom (4.52% yoy; Alberto Ramos | -28bp from June), below the 0.22% consensus, driven in part by declining food & fuel Goldman Sachs & Co. LLC prices. The composition of the report was relatively favorable: Core and services surprised to the downside and price pressures on core-industrial goods eased from June. Core inflation printed at 0.21% (0.25% consensus) with the year-on-year measure easing to 4.35% yoy (4.45% in Jun). Services inflation printed at 0.41%, below consensus at 0.59%, with core-services inflation also up a milder and lower than expected 0.30% mom, 5.08% yoy, with momentum (3-mma sa) easing by 50bp to a still relatively high 4.9%. The deceleration of inflation from June was driven by the larger than expected decline in food at home prices (-1.14% vs +0.87% in Jun) and lower prints in the clothing, household goods, communication, and personal care/hygiene groups, partially offset by higher prints in food away from home, housing (rising electricity tariffs; 3.03%) and transportation (rising airfares; +11.7%). Inflation in Jul surprised to the downside in food-at-home, transportation (deeper than expected decline in gasoline prices), and personal expenses; to the upside in food-away-from-home. The inflation momentum eased for core (-60bp to 4.5%), slack-sensitive services (-50bp to 5.8%), and core-industrial goods (-90bp to 5.4%); and eased slightly for labor-intensive services (-20bp to a still very high 7.1%).

The favorable Jul inflation print and signs of easing global oil price pressures reduce fears of a major near-term price spike. However, the inflation pressures among services remain intense and disseminated, including among some key metrics (labor-intensive, 7.3%; slack-sensitive, 6.2%); Goods/tradable inflation remains low/contained and is now again on a downward trend (1.87% vs 7.20% in mid-Jul 2025) with BRL appreciation contributing visibly to the low-anchoring of inflation on this component. A backdrop of still challenging inflation dynamics (with services tracking shy of 6% yoy), unanchored short- and medium-term inflation expectations, a positive output gap, tight labor market, and a wide pipeline of fiscal/quasi-fiscal/credit measures ahead of the 4Q26 election in our view requires a conservative calibration of the monetary policy normalization cycle, i.e., limited room for cuts but the totality of macro-financial data is re-opening the door for additional easing.

IPCA-15 Headline Inflation: 0.06% mom (4.52% yoy) vs. consensus at 0.22% and GS at 0.22%; prior 4.80% yoy (June IPCA-15)

Core (average of five measures): 0.21% mom (4.35% yoy; prior 4.45%)

Core services: 0.30% mom (5.08% yoy; prior 5.25% yoy)

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Core industrial goods: 0.11% mom (4.23% yoy; prior 4.14% yoy)

1. IPCA inflation printed at a low 0.06% in Jul (well below the 0.22% consensus), vs. 0.41% in the Jun IPCA-15 and 0.16% Jun IPCA. Annual IPCA inflation decelerated to 4.52%; vs. 4.80% in the Jun IPCA-15 and 4.64% Jun IPCA. 2. The average of the five main core measures printed at 0.21% (consensus 0.25%), vs. 0.34% in Jun, pushing the 12-month rate to 4.35% (vs 4.45% in Jun). The 3-mma sa of core inflation declined by 60bp to 4.5%. 3. The deceleration of inflation from June was driven by the larger than expected decline in food at home prices (-1.14% vs +0.87% in Jun) and lower prints in the clothing, household goods, communication, and personal care/hygiene groups, partially offset by higher prints in food away from home (0.55% vs 0.40% in Jun), housing (rising electricity tariffs; 3.03%) and transportation (rising airfares; +11.7%). Inflation in Jul surprised to the downside in food at home, transportation (deeper than expected decline in gasoline prices), and personal expenses; to the upside in food-away-from-home. 4. Services printed at 0.41% (consensus at…