LowIV Macro Policy & Sovereign Debt25 September 2026, Friday
Brazil's IPCA-15 flash inflation beat expectations with a 0.70% rise in September; at 4.47% year on year it is pressing against the 4.5% target ceiling
The IPCA-15 released by Brazil's statistics institute IBGE on 25 September rose 0.70% in September; the forecast in the Reuters poll was 0.53%. The annual rate rose from 4.24% to 4.47%, approaching the 4.5% ceiling of the target band; the main driver was residential electricity, up 7.42%.
According to a 25 September InfoMoney report, the IPCA-15 rose 0.70% in September; the Reuters poll forecast was 0.53% month on month and 4.30% year on year. The annual rate rose to 4.47% and the year-to-date increase to 3.82%; in September a year earlier the monthly rise was 0.48%. All 9 groups rose: housing 2.07%, personal expenses 0.96%, transport 0.60%, food and beverages 0.40%, education 0.03%. Residential electricity, after a 6.25% fall in August, rose 7.42% as the Itaipu discount ended and the yellow tariff flag of 1.885 reais per 100 kWh took effect.
The Rio Times' 25 September report gave the median forecast as 0.55% and wrote that the result exceeded the top of the forecast range; the forecast figures differ between the two sources. According to the same report, the central bank's Copom had cut the Selic by 25 basis points for the 5th consecutive time on 16 September to 13.75%, and the market expects rates to stay unchanged for the rest of the year. On the day of the release the Ibovespa fell 0.27% to 183,476.86 points and the dollar/real was flat at 5.16; the next Copom meeting is on 3–4 November.
Talay assessment
Bottom line
Nine days after Copom's 5th cut on 16 September, the September flash data brought annual inflation to 4.47%, 3 basis points below the target ceiling. Most of the increase comes from electricity items such as the end of the Itaipu discount and the tariff flag, making it partly one-off; however, the rise across all 9 groups narrows the room for a further cut at the 3–4 November meeting.
Likely effects
- Monetary policyNegativeWeeks
An annual rate of 4.47% strengthens the case for Copom to pause its easing cycle if the full September IPCA exceeds the ceiling; the market already expects rates to stay at 13.75% until year-end.
- HouseholdsNegativeWeeks
The 7.42% rise in residential electricity and the additional tariff of 1.885 reais per 100 kWh directly increase energy bills for low-income households.
- MarketsUncertainWeeks
On the day of the release the Ibovespa fell 0.27% and the dollar/real stayed flat at 5.16; the market did not price the data as a surprise that would change the rate path.
Possibilities, ranked
- 1Pause in November60%
September IPCA comes in around 4.5% year on year and Copom holds the Selic at 13.75% on 3–4 November.
Watch: September IPCA data due in early October
- 2One-off effect fades25%
The electricity effect reverses in October, the annual rate declines and Copom continues with a 25 basis point cut.
Watch: October tariff flag colour and October IPCA-15
- 3Ceiling breached15%
Annual inflation exceeds 4.5% and Copom turns to a tightening tone.
Watch: Whether annual IPCA rises above 4.5%
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- IPCA-15 monthly (forecast 0.53%)▼ 0.70%
- IPCA-15 annual▼ 4.24% → 4.47%
- Residential electricity▼ +7.42%