The latest inflation data for Brazil (BR) from the Sigmanomics database shows a year-over-year (YoY) inflation rate of 4.68% for November 2025. This figure is below market expectations of 4.75% and down from October’s 5.17%, signaling a meaningful slowdown in price pressures. Over the past 12 months, inflation has fluctuated between a high of 5.53% in May and a low of 4.56% in February, reflecting volatile supply-side factors and shifting demand dynamics.

Drivers this month

• Energy prices stabilized, contributing -0.12 percentage points (pp) to the slowdown.
• Food inflation eased to 6.20% YoY from 7.10% last month, reducing headline pressure by -0.15 pp.
• Core services inflation remains elevated at 5.00%, limiting further disinflation.

Policy pulse

Brazil’s central bank has maintained a restrictive monetary policy stance, with the Selic rate steady at 13.25%. The inflation print below estimates supports the current policy path, though the bank remains vigilant given core inflation persistence. The 4.68% reading sits above the 4% target midpoint but within the tolerance band, suggesting gradual normalization ahead.

Market lens

Immediate reaction: The BRL/USD currency pair strengthened by 0.30% in the first hour post-release, reflecting improved investor sentiment. Local bond yields fell modestly, with the 2-year yield down 8 basis points, signaling eased inflation risk premia.

Brazil’s inflation trajectory must be viewed alongside core macroeconomic indicators. GDP growth for Q3 2025 was 1.20% quarter-on-quarter (QoQ), slightly below expectations but supported by resilient domestic consumption. Unemployment remains elevated at 9.10%, dampening wage-driven inflation pressures. The fiscal deficit narrowed to 3.50% of GDP in Q3, reflecting improved tax collection and restrained public spending.

Monetary Policy & Financial Conditions

The Selic rate has been held steady since September 2025, after a series of hikes totaling 325 basis points since early 2024. Inflation expectations for 2026 have declined to 4.30%, down from 4.70% six months ago, indicating growing confidence in policy effectiveness. Credit growth slowed to 1.80% YoY, consistent with tighter financial conditions.

Fiscal Policy & Government Budget

Fiscal discipline remains a cornerstone of Brazil’s macro framework. The government’s primary surplus target of 1.00% of GDP for 2025 is on track, aided by reforms in social spending and tax administration. This fiscal prudence supports inflation control by limiting demand-side overheating risks.

External Shocks & Geopolitical Risks

Global commodity prices, particularly oil and soybeans, have stabilized after mid-year volatility. However, ongoing geopolitical tensions in Latin America and trade uncertainties with China pose downside risks to Brazil’s export revenues and inflation outlook.

Drivers this month

• Energy prices contributed -0.12 pp to the headline deceleration.
• Food inflation eased by 0.90 pp MoM, reducing overall inflation by -0.15 pp.
• Services inflation held steady, limiting further declines.

Policy pulse

The inflation print supports the central bank’s decision to pause rate hikes. The current 4.68% is above the 4% target but within the acceptable range, suggesting a cautious approach to monetary easing in 2026.

Market lens

Immediate reaction: The BRL strengthened 0.30% versus USD, while 2-year government bond yields declined by 8 basis points, reflecting reduced inflation risk premiums.

Looking ahead, Brazil’s inflation outlook balances between moderating price pressures and persistent structural challenges. The central bank’s forward guidance signals a steady policy stance, with potential rate cuts only if inflation expectations remain anchored.

Bullish scenario (20% probability)

• Global commodity prices decline further, easing input costs.
• Fiscal consolidation continues, reducing demand-side inflation.
• Inflation falls below 4% by Q3 2026, prompting monetary easing.

Base scenario (60% probability)

• Inflation gradually declines to 4.00–4.50% by late 2026.
• Monetary policy remains on hold, with cautious rate cuts possible in H2 2026.
• Fiscal policy remains prudent, supporting macro stability.

Bearish scenario (20% probability)

• Geopolitical shocks disrupt commodity exports, pushing inflation above 5%.
• Currency depreciation fuels imported inflation.
• Central bank forced to hike rates again, slowing growth.

Brazil’s November 2025 inflation print of 4.68% YoY marks a positive inflection point after months of elevated price pressures. The data from the Sigmanomics database confirms a trend toward moderation, supported by stable commodity prices, fiscal discipline, and a steady monetary policy stance. However, core inflation remains a concern, and external risks could disrupt the outlook. Investors and policymakers should monitor geopolitical developments and currency movements closely. Overall, the inflation trajectory supports a cautious but optimistic macroeconomic environment for Brazil heading into 2026.

Key Markets Likely to React to Inflation Rate YoY

Brazil’s inflation data typically influences local currency strength, bond yields, and equity market sentiment. The following tradable symbols historically track inflation trends due to their sensitivity to interest rates, currency fluctuations, and economic growth prospects.

• BRLUSD: The Brazilian real vs. US dollar pair reacts strongly to inflation surprises, reflecting monetary policy expectations.
• IBOV: Brazil’s main equity index, sensitive to inflation-driven interest rate changes.
• VALE3: Mining giant whose revenues and stock price correlate with commodity-driven inflation dynamics.
• BTCUSD: Bitcoin often acts as an inflation hedge, influencing investor flows during inflation shifts.
• USDBRL: The inverse of BRLUSD, also highly sensitive to inflation and monetary policy.

Inflation Rate YoY vs. BRLUSD Since 2020

Since 2020, Brazil’s inflation rate and the BRLUSD exchange rate have shown a strong inverse correlation. Periods of rising inflation often coincide with BRL depreciation against the USD, reflecting concerns over monetary tightening and economic stability. For example, the inflation spike in mid-2021 corresponded with a 15% BRL depreciation. The recent easing of inflation to 4.68% has supported a 3% BRL appreciation in November 2025, underscoring the currency’s sensitivity to inflation dynamics.

FAQs

What is the current Inflation Rate YoY for Brazil?

The latest inflation rate for Brazil is 4.68% year-over-year as of November 2025, down from 5.17% in October.

How does the Inflation Rate YoY affect Brazil’s economy?

Inflation influences purchasing power, interest rates, and monetary policy decisions, impacting growth and investment in Brazil.

What are the risks to Brazil’s inflation outlook?

Risks include geopolitical tensions, currency volatility, and commodity price shocks that could push inflation above target.

Final Takeaway: Brazil’s inflation is easing but remains above target, requiring continued policy vigilance amid external uncertainties.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.