- São Paulo’s consumer price index rose just 0.15% in early February, down from 0.21% in January, with food prices going completely flat
- Five of seven inflation components decelerated, including education’s seasonal spike easing from 5.12% to 3.92%
- Brazil’s central bank holds the Selic at 15% — its highest since the mid-2000s — but markets increasingly expect rate cuts to begin by March
Grocery bills in São Paulo — Latin America’s largest city and Brazil’s economic engine — effectively stopped rising in early February. This is part of The Rio Times’ daily coverage of Latin American markets and financial news.
The food component of the city’s consumer price index registered zero variation, down from 0.11% a month earlier, a signal that the Central Bank’s aggressive tightening campaign is finally filtering through to kitchen tables.
The broader IPC-Fipe index, published Tuesday by the University of São Paulo‘s economics research foundation, rose just 0.15% in the first week-block of February, slowing from January’s 0.21%. Five of seven components lost momentum.
Education, which had surged 5.12% in January as annual school fee adjustments hit, eased to 3.92%. Health costs flipped from a 0.20% increase to a marginal 0.02% decline. Personal expenses deepened their deflation, falling 0.51% after a 0.36% drop the previous month.
The two outliers pushing prices higher were transport — accelerating from 0.46% to 0.66%, likely reflecting fuel adjustments — and housing, which remained in deflationary territory but narrowed its decline from -0.14% to -0.05%. Clothing also cooled, from 1.28% to 1.00%.
The numbers matter beyond São Paulo’s city limits. The IPC-Fipe is Brazil’s oldest continuous inflation measure, tracked since 1939, and its weekly readings serve as an early barometer for the national IPCA index that officially guides monetary policy.
With the 12-month IPC-Fipe accumulation standing at 3.80% through January — well within the Central Bank’s 1.5-to-4.5% tolerance band — the data reinforces a trend that markets have been pricing in for weeks.
The Central Bank’s benchmark Selic rate sits at 15%, the highest since the mid-2000s, after an aggressive hiking cycle that has visibly cooled economic growth — GDP projections for 2026 hover around a sluggish 1.8%.
The Focus survey of financial institutions now shows the median 2026 IPCA forecast declining for a fifth consecutive week, to 3.97%, and markets expect the Selic to fall to 12.25% by year-end. The question is no longer whether cuts are coming, but when the first one arrives. Most analysts eye March.
For President Lula, whose coalition has loudly argued that sky-high rates punish working families more than they tame prices, the softening inflation data is a political gift in a pre-election year. For Central Bank chief Gabriel Galípolo, it is vindication of technical patience.
The grocery aisles of São Paulo may be offering both of them the same message: the worst of the inflation squeeze is passing, and the real debate now is how fast Brazil can afford to let up.
Related coverage: Brazil’s Morning Call | Colombia’s External Debt Hits 54.8% of GDP as Costs Soar