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Brazil's inflation comes in above expectations and central bank's ceiling

Brazil's consumer prices rose 0.82% in September as 12-month inflation of 4.58% creeps above the BCB's ceiling, IBGE said on Friday, October 9, 2026.

· 2 min read · By ETF.net Research · Rebecca Jones

Brazilian Real banknotes of various denominations are fanned out under slatted sunlight.

Key takeaways

  • One household bill did most of September's damage.
  • August's power discount was written for one month only.
  • Crossing the ceiling once does not yet count as a breach.
  • The next rate decision lands after the presidential runoff.

Brazil's official consumer prices rose 0.82% in September 2026, pushing the 12-month rate to 4.58%, back above the Banco Central do Brasil's (BCB's) ceiling of 4.5%.

IBGE, the national statistics agency, published the figures on Friday, October 9. Economists surveyed by Reuters had expected an increase of 0.73% in September and an annual increase of 4.50%.

Brazil's power bill accounted for the largest single piece of September's rise. Residential electricity rose 7.98% and added 0.32 percentage points to the monthly index by itself as a one-off discount dropped away.

Aneel, Brazil's power regulator, approved a credit that returned money left over from selling power at Itaipu, the hydro plant on the border with Paraguay. The credit was written only onto bills issued in August, and IBGE said it was not repeated in September.

The BCB's inflation target is 3% a year, with room of 1.5 percentage points on either side, creating an upper ceiling of 4.5%. In August, the 12-month rate was 4.22%, falling inside the range.

Since January 2025, the Bank has checked that 12-month rate every month, and a formal breach counts only after six months in a row outside the range. August was inside the range, so September is only the first month of that count.

However, on Monday, October 5, the BCB's Focus survey of economists put inflation at 5.01% by the end of 2026, above the ceiling. The survey came out before Friday's reading. On that figure, those economists expect that count to keep running through the end of the year.

Copom, the committee that sets rates, cut the Selic, the BCB's benchmark rate, to 13.75% from 14% on Wednesday, September 16. It next meets on Tuesday, November 3, and Wednesday, November 4, after the second round of the presidential election on Sunday, October 25, between Senator Flávio Bolsonaro, the eldest son of former president Jair Bolsonaro, and President Lula.

The same survey has the Selic at 13.50% by the end of 2026, and inflation above the ceiling. From 13.75% now, 13.50% would be another cut.

Frequently asked questions

Why did electricity push September inflation so hard?

Residential electricity rose 7.98% after a one-off August credit tied to leftover Itaipu power sales was not repeated.

Is inflation above the central bank's ceiling?

The 12-month rate is 4.58%, which is 0.08 percentage point above the 4.50% ceiling.

Does this count as a formal breach of the target?

A formal breach counts only after six straight months outside the range, and September is only the first month of that count.

What do economists expect for inflation and the Selic by year-end?

The Focus survey put end-2026 inflation at 5.01% and the Selic at 13.50%, which from 13.75% now would be another cut.

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