Brazil inflation slows to 4.44% in July on falling food prices

Brazil's annual inflation rate eased to 4.44% in July, down from 4.64% in June, marking an eleven-month low. This deceleration was primarily driven by a significant drop in food prices, which fell by 0.67% in July after a 0.24% decrease in June. Key contributors to this decline included sharp price reductions for tomatoes (-29.09%), potatoes (-19.59%), and carrots (-14.41%), alongside a 2.45% drop in coffee prices.

The cooling food prices helped offset price increases in other sectors, such as housing (up 0.99%) and health and personal care items (up 0.40%). Clothing and footwear prices also saw a deflationary trend, decreasing by 0.66% in July. The monthly inflation rate for July was 0.07%, considerably lower than June's 0.16% and July 2025's 0.26%.

Despite this positive trend, Brazil's inflation rate remains above the Central Bank's target of 3%, with a tolerance margin up to 4.5%. Market economists forecast year-end inflation at 5.02%, exceeding both government projections and the central bank's goal. This persistent inflation, even with the recent slowdown, has led the Central Bank to maintain high real interest rates, although it did reduce the basic interest rate by 0.25 percentage points to 14% in July, down from a February high of 15%.