February inflation was 0.70%, above forecast; Pressure from services reinforces expectations of a smaller Selic cut at the next Copom meeting
Brazil’s official inflation was higher than expected in February and reinforced economists’ assessment that the BC (Central Bank) should adopt caution at the beginning of the Selic reduction cycle.
The IPCA (Broad National Consumer Price Index) rose 0.70% in the month, after 0.33% in January, according to data released by IBGE (Brazilian Institute of Geography and Statistics) this Thursday (12.mar.2026). Here’s the (PDF – 452 kB).
The index accumulated 1.03% in 2026 and 3.81% in 12 months, below the 4.44% recorded in the immediately previous period, but still with signs of pressure on relevant components of inflation. The result is monitored by the market because it influences the Central Bank’s monetary policy decisions.
The Copom (Monetary Policy Committee) will meet next week, on March 17th and 18th, to define the new interest rate.
The senior economist at Genial Investimentos, Gabriel Pestana, said that the index was above the institution’s projection, of 0.66%, and also exceeded market expectations. According to him, the composition of the data showed qualitative deterioration.
“The quality showed a deterioration at the margin, with the pressure concentrated especially on services and cores”he stated.
Pestana stated that there was pressure on items such as banking services and car repairs.
In the economist’s assessment, the advance of the centers and the resistance of services should attract the attention of the BC. He said the result strengthens bets on a 0.25 pp (percentage point) cut in the Selic, instead of 0.50 pp
The economist at SulAmérica Investimentos, Mariana Rodrigues, also said that the result was worse than expected. According to her, services inflation remained under pressure and the items that had been helping to reduce projections for the annual index did not confirm this movement in February.
“Services inflation remained under pressure, while food at home and industrial goods did not confirm the easing trend”he declared.
Rodrigues stated that the institution projects inflation of 4.1% in 2026, but said that the scenario now has an upward bias given the recent pressure on oil prices caused by the war in the Middle East.
Economist and advisor to Ancord (National Association of Brokers and Distributors of Securities, Exchange and Commodities), Pablo Spyer, said that the result also shows resistance in inflation linked to domestic activity. According to him, the main pressure came from the services sector, with increases in items such as courses, airline tickets and insurance.
Spyer stated that there was some relief in fuels after the price reduction promoted by Petrobras at refineries at the end of January. Even so, he said that the index still does not capture the recent rise in oil prices on the international market.
“Oil returned to around US$100 per barrel due to tensions in the Middle East and interruptions in maritime transport”he declared.
C6 Bank economist Claudia Moreno said that the result was also above the institution’s projection, of 0.64%. According to her, airline tickets and education played a relevant role in the increase in the index.
“The IPCA rose 0.70% in February, a little above what we projected. Air tickets and education made an important contribution, while food at home increased 0.26% and gasoline fell 0.61%”he stated.
Moreno declared that inflation accumulated in 12 months slowed down partly due to statistical effects, as the significant increase registered in February 2025 left the basis of comparison. Even so, he said that underlying services remain at a high level, with an increase of approximately 5.5% until February.
According to her, this difference between the full index and the inflation cores helps explain why the convergence of inflation to the target still represents a challenge for monetary policy.
The economist stated that the recent relief in the index was influenced by the fall in commodities in reais, which reduced pressure on food and industrial goods. Even so, he said that the scenario ahead still brings risks.
Moreno declared that the heated job market, the possibility of devaluation of the real and geopolitical tensions could put pressure on inflation in the coming months. C6 Bank’s projection is that the IPCA will end 2026 at 4.5%.
She said that the data released by IBGE does not change the assessment that Copom should begin the interest rate reduction cycle gradually.
“The Copom should start the cycle of cuts with a 0.25 pp reduction in the Selic, to 14.75%. In our scenario, interest rates should end the year at 12.5%”, declared.
