Temporary Energy Bonus Pushes Brazil into Deflation, But Core Prices Stay High
Brazil’s official statistics agency IBGE reported that consumer prices, measured by the IPCA-15 index, fell 0.14% in August 2025, pulling the 12-month rate down to 4.95%.
At first glance this looks like relief, but the fall came almost entirely from a temporary electricity discount, not from a broad slowdown in costs. The biggest factor was the Itaipu Bonus.
According to the energy regulator ANEEL, about R$936.8 million in credits were applied to electricity bills in August. Nearly 97% of households qualified for the bonus, which averaged around R$11.59 per home.
This offset the red flag surcharge of R$7.87 per 100 kWh, which would otherwise have raised power costs. Food prices also helped the index. “Food at home” fell 1.02%, with tomatoes, onions, potatoes, rice, and meats all cheaper.
Transport costs dropped 0.47%, driven by lower gasoline, airfares, and new car prices. Yet other areas told a different story. Personal expenses rose 1.09%, education gained 0.78%, and health and personal care climbed 0.64%.
Most strikingly, services prices increased 0.50% in the month and 6.62% over twelve months. These are the most stubborn parts of inflation, and they remain high because Brazil’s labor market is unusually tight.
Official data show unemployment at 5.8% in the second quarter of 2025, the lowest since records began in 2012. The central bank sees this as the real challenge.
On July 30, 2025, policymakers kept the benchmark Selic interest rate at 15.00%, one of the highest in the world. The bank’s weekly Focus survey shows most analysts expect that rate to remain unchanged through the end of the year.
The story behind the story is that Brazil’s deflation is misleading. A government-approved credit on power bills briefly pushed prices down, while core inflation—especially in services—remains strong.
For households, the bonus gave temporary relief. For businesses and investors, the bigger signal is that Brazil’s fight against inflation is far from over, and high interest rates will continue to weigh on growth
Live Market IntelligenceBrazil — Live Market Board
Rio Times · Live Market Intelligence
Brazil — Live Market Board
-0.01%
185,188.13
-0.01%
65,473.16
+0.91%
11,315.26
-1.14%
3,058,093
-1.55%
2,534.46
+1.81%
59,719.97
+0.43%
| Instrument | Last | Change | YoY | Prev. | High | Low | Volume |
|---|---|---|---|---|---|---|---|
| IBOV | 185,188.13 | -0.01% | +21.85% | 185,205.09 | 168,310 | 167,142 | — |
| USD/BRL | 5.16 | +0.01% | -5.13% | 5.16 | 5.18 | 5.14 | — |
| SELIC | 14.00% | — | — | — | — | — | |
| PETR4 | 41.64 | -0.05% | +35.19% | 41.66 | 41.97 | 41.15 | 41,499,400 |
| VALE3 | 72.97 | +0.83% | +30.75% | 72.37 | 73.54 | 72.66 | 17,658,000 |
| ITUB4 | 38.60 | -1.03% | +4.57% | 39.00 | 39.34 | 38.39 | 29,487,800 |
| BBDC4 | 16.85 | +0.36% | +3.50% | 16.79 | 16.90 | 16.67 | 19,416,900 |
| BBAS3 | 19.37 | +0.47% | +0.73% | 19.28 | 19.44 | 19.16 | 11,069,200 |
| B3SA3 | 14.26 | -0.21% | +12.73% | 14.29 | 14.47 | 14.11 | 33,037,800 |
| ABEV3 | 14.89 | -0.80% | +21.91% | 15.01 | 15.07 | 14.81 | 16,453,100 |
| WEGE3 | 47.59 | +0.49% | +29.99% | 47.36 | 48.08 | 47.36 | 3,364,600 |
| PRIO3 | 59.14 | -0.19% | +50.67% | 59.25 | 59.81 | 58.74 | 3,325,600 |
| SUZB3 | 41.33 | +2.35% | -23.55% | 40.38 | 41.48 | 40.35 | 3,914,900 |
| RENT3 | 34.68 | -0.09% | +0.84% | 34.71 | 34.96 | 34.35 | 7,979,100 |
| AZZA3 | 15.89 | -2.63% | -53.76% | 16.32 | 16.42 | 15.82 | 1,330,300 |
| CSNA3 | 4.30 | +0.47% | -42.65% | 4.28 | 4.41 | 4.26 | 10,076,100 |
| GGBR4 | 24.69 | +2.19% | +51.38% | 24.16 | 24.85 | 24.18 | 7,047,600 |
| ENEV3 | 24.21 | -1.38% | +70.49% | 24.55 | 24.64 | 23.99 | 9,297,000 |
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