Brazil's Mid-February Inflation Surges to 0.84%, Exceeding Forecasts

Inflation Exceeds Expectations in Mid-February

Brazil's consumer prices, as measured by the IPCA-15 index, recorded a significant increase of 0.84% in mid-February 2026, according to data released by the official statistics agency IBGE. This figure surpassed market expectations, which had a median estimate of 0.57% in a Reuters poll of economists, and was well above the general market forecast of 0.6%. The rise marks the steepest increase in one year, following a 0.20% increase in mid-January.

The annual inflation rate, covering the past 12 months, reached 4.10%. While this represents a slight deceleration from the 4.50% observed a month earlier, it still topped analysts' expectations of 3.82%.

Key Drivers of the Price Surge

The primary contributors to the mid-February inflation surge were the transportation and education sectors.

• Transportation: This sector saw a notable increase of 1.72%. Within this category, airfares jumped by 11.64%, and public transportation fares surged by 5.39%.
• Education: Prices in the education sector rose by 5.20%, largely due to annual tuition adjustments typically implemented at the beginning of the academic year.

In contrast, other categories like food and beverages (0.20%) and housing and utilities (0.06%) showed more habitual patterns of price increases.

Central Bank's Stance and Future Outlook

The Banco Central do Brasil (BCB), the country's central bank, maintains an inflation target of 3%, with a tolerance band of +/- 1.5 percentage points, setting an upper limit of 4.5%. To combat persistent inflation, the central bank has held its benchmark interest rate, the Selic rate, at a near two-decade high of 15% since mid-2025.

Despite the higher-than-anticipated mid-February inflation data, economists generally still expect the central bank to initiate a monetary easing cycle by cutting the Selic rate in March. However, the unexpected rise in prices may lead the BCB to adopt a more cautious approach, potentially reducing the likelihood of a larger 50-basis-point rate cut. The data for the IPCA-15 was collected between January 15, 2026, and February 12, 2026.