Brazil’s official inflation, measured by the Broad Consumer Price Index (IPCA), rose 0.56% in October, according to the Brazilian Institute of Geography and Statistics (IBGE). With this result, inflation accumulated in the year reached 3.88%, while in the last 12 months ending in October the increase reached 4.76% — the highest rate in 11 months and above the ceiling of the stipulated 4.5% target. by the National Monetary Council (CMN).
The index exceeded market expectations. According to the Focus bulletin released at the beginning of the week, the forecast was for an increase of 0.52%. “There are clear signs of worsening in the most recent readings. Furthermore, expectations for future inflation continue to be one of the main challenges”, says Igor Cadihac, economist at PicPay.
In October, housing led the increases, with an increase of 1.49%, followed by food, which rose 1.06%. The increase in housing prices was driven by the electricity bill, which became 4.76% more expensive. “In October, the red flag level 2 was in force, which adds R$7.87 for every 100 kWh consumed, while in September the red flag level 1 was in force, with an increase of approximately R$4.46”, explains André Almeida , price research manager at IBGE.
In the food sector, the increase in meat was the highlight, with an average increase of 5.81%. Among the cuts with the greatest increase are the chuck, rib, sirloin and rump. “The increase in meat prices is due to lower supply, caused by the dry climate and the reduction in animal slaughter, in addition to the increase in exports”, explains Almeida. This was the biggest monthly variation in meat since November 2020, when it was 6.54%.
The release of the IPCA had an immediate impact on the market, raising the dollar and future interest rates. At around 9:30 am, the rate on the Interbank Deposit (DI) contract for January 2026 rose from 13.015% — the previous Thursday’s closing value — to 13.065%. The DI for 2027 also registered an increase, going from 13.04% to 13.13%.
At the same time, the dollar was trading with an appreciation of 1.32%, quoted at R$5.57501. In addition to inflation, the rise in the dollar was influenced by the consequences of Donald Trump’s election in the United States and by uncertainties about the Chinese economy. The market is also awaiting spending control measures to be announced by President Luiz Inácio Lula da Silva (PT).
