Brazil's IPCA-15 inflation preview index fell 0.4% in August, according to data released Wednesday by the IBGE (Brazilian Institute of Geography and Statistics). It is the sharpest monthly drop for the indicator in four years, since August 2022, when it fell 0.73%.
The decline was driven mainly by a temporary discount on electricity bills tied to a bonus from the Itaipu hydroelectric dam, which took effect in August. According to Folha de S.Paulo, airfares, food and fuel prices also fell during the month, helping pull the index down after it had risen 0.06% in July. G1 corroborated the report, noting the decline was led by housing, transportation and food costs, with electricity, airfares and fuel getting cheaper; among food items, tomatoes, potatoes and carrots saw the steepest price drops.
August's deflation is the index's first in a year, since August 2025, when the IPCA-15 fell 0.14%. The result also surprised financial markets: the median estimate compiled by Bloomberg and cited by Folha had pointed to a 0.32% decline.
Annual pace slows
Despite the monthly deflation, the IPCA-15 still shows a 12-month accumulated increase, though at a slower pace: the annual rate eased to 4.24% through August, down from 4.52% through July. With the new reading, the index dropped below the 4.5% ceiling of the inflation target pursued by Brazil's Central Bank for the IPCA, the country's official inflation gauge, something that had not happened since April.
The IPCA-15 serves as an early preview of the IPCA, which the IBGE releases later, and tends to signal a trend for the official index. One key difference is the price-collection window: the August IPCA-15 covered the period from July 16 to August 14, while the IPCA survey runs through the full reference month. The IBGE will release the official August IPCA figure on September 11.
For context, the IPCA is the rate Brazil's Central Bank uses to set interest-rate policy, similar to the CPI in the United States. Economists had already expected the IPCA-15 deflation because of the Itaipu bonus, according to Folha. The relief is considered temporary and is expected to reverse in coming months once the electricity discount's effect drops out of the index's comparison base.