Brazil's Sao Paulo CPI rose 0.19% in latest week
TL;DR
São Paulo's CPI rose 0.15% in early February, down from January, as food prices stabilized, signaling easing inflation. This supports expectations for potential interest rate cuts by the Central Bank to balance economic recovery.
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Brazil's Sao Paulo CPI rose 0.19% in latest week
São Paulo Inflation Eases to 0.15% as Food Prices Stabilize
February 25, 2026
São Paulo’s consumer price index (CPI) rose 0.15% in early February, down from 0.21% in January, signaling a moderation in inflationary pressures. The decline was driven by flat food prices, which registered zero variation in early February after rising 0.11% in January. This marks a key development as the Central Bank's aggressive monetary tightening appears to be gradually curbing inflation at the household level.
Five of seven inflation components decelerated, including education costs, which eased from a seasonal spike of 5.12% in January to 3.92%. Health care costs shifted from a 0.20% increase to a marginal 0.02% decline, while personal expenses continued to trend downward, falling 0.51%. Transport prices accelerated to 0.66% due to fuel adjustments, and housing costs remained in deflationary territory but narrowed to -0.05% from -0.14%.
The IPC-Fipe, Brazil's longest-running inflation measure (since 1939), serves as an early indicator for the national IPCA index. The 12-month IPC-Fipe accumulation stood at 3.80% through January, comfortably within the Central Bank's 1.5–4.5% target range. This reinforces expectations that the benchmark Selic rate, currently at 15%—its highest since the mid-2000s—may soon ease. Financial markets anticipate the first rate cut by March, with the Selic projected to fall to 12.25% by year-end.
The data also highlights a political and economic crossroads. President Lula's coalition has criticized high interest rates for disproportionately affecting low-income households, while Central Bank chief Gabriel Galípolo emphasizes the need for sustained inflation control. With São Paulo's grocery prices stabilizing and broader economic growth projections at 1.8% for 2026, the focus now shifts to balancing monetary easing with economic recovery.
For investors, the IPC-Fipe's trajectory underscores a potential shift in Brazil's monetary policy, with São Paulo's inflation trends offering a critical barometer for national developments.
