Brazil’s inflation decelerates to 4.83pc in December

Market: Agriculture, Electricity, Oil products
10/01/25

Brazil's headline inflation decelerated to 4.83pc at the end of 2024, as declines in power costs were only partially offset by gains in fuel and food, according to government statistics agency IBGE.

The consumer price index (CPI) slowed from 4.87pc in November and compared with 4.76pc in October. The year-end print compared with 4.62pc in December 2023, but was down from 5.79pc in December 2022.

Food and beverage costs rose by an annual 7.69pc in December, accounting for much of the monthly increase, following a 7.63pc annual gain in November.

Beef costs increased by an annual 20.84pc in December following a 15.43pc annual gain for the prior month.

Higher beef costs in the domestic market are related to the Brazilian's real depreciation to the US dollar, with the Brazilian real depreciating by 27.4pc to the US dollar between 31 December 2023 and the same date in 2024. Still, beef prices decelerated by 5.26pc in December alone, down from 8pc in November.

Soybean oil rose by 29.21pc over the year, an increase of 1.64 percentage points from November.

Fuel prices rose by an annual 10.09pc in December after an 8.78pc gain in November. Motor fuel costs grew by 0.7pc in December, compared with a 0.15pc drop in the prior month, thanks to higher gasoline prices. Diesel prices increased by 0.66pc in the 12-month period, while it decreased by 2.25pc in November.

Gasoline prices — the major individual contributor to the annual high, according to IBGE — rose by 9.71pc in December from 9.12pc in the prior month. Still, that was lower than in December 2023, when the annual inflation for gasoline stood at 11pc.

Power costs in December contracted by an annual 0.37pc in December, as improvements in power generation allowed for removal of a surcharge from customer bills, after a gain of 3.46pc the prior month. In November, Brazil faced lower river levels at its hydroelectric plants after a period of severe droughts.

Brazil's central bank is targeting CPI of 3pc with a margin of 1.5 percentage point above or below.

Brazil's central bank in December raised its target rate to 12.25pc from 11.25pc as the real's depreciation accelerated. It also signaled it is likely to increase the rate to 14.25pc by March.

Monthly inflation accelerated to 0.52pc in December from 0.39pc in November. But the rate was lower than in December 2023, when it stood at 0.56pc.

By Maria Frazatto

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