The Getulio Vargas Foundation (FGV) reported that the General Price Index – Market (IGP-M) ended December 2025 with a slight negative variation of 0.01%, taking the index to an accumulated deflation of 1.05% for the year. The outcome marked a sharp reversal from 2024’s strong rise and surprised many market forecasts.
IGP-M deflation Brazil 2025 and what it means for input costs
The fall in the IGP-M was led by the Producer Price Index (IPA), which accounts for 60% of the index. The IPA declined 0.12% in December and accumulated a drop of 3.35% across 2025, signalling weaker pressure on agricultural and industrial input costs. Improved harvests and a larger supply of commodities helped to absorb some price pressure at the wholesale level.
By contrast, consumer-facing indicators moved in the opposite direction. The Consumer Price Index (IPC), which carries a 30% weight in the IGP-M, rose 0.24% in December and finished the year up 4.08%. The National Construction Cost Index (INCC) registered an accumulated increase of 6.10% for 2025, reflecting higher costs for materials and labour in the building sector.
The divergence highlights a persistent gap between wholesale prices and those paid by final consumers. While wholesale deflation relieves some cost pressures for manufacturers and producers, services and housing-related costs continued to drive consumer inflation throughout the year, albeit more moderately than in past periods.
For farmers the mixed signals carry practical implications. Lower costs for fertilisers, pesticides, seeds and other inputs can improve margins, particularly for producers facing subdued commodity prices. However, the same wholesale weakness often reflects softer demand and lower commodity prices at origin, which may limit revenues at the farmgate. Producers will therefore need careful cash-flow and marketing strategies to manage the timing gap between falling costs and selling prices.
From a macroeconomic perspective, the result reduces one source of inflationary pressure and may ease the trade-offs faced by policymakers. Brazil’s policy rate remained at 15% per annum at year-end. If wholesale prices continue to calm and consumer inflation trends moderate, markets expect that 2026 could permit gradual adjustments in monetary policy, dependent on the evolution of economic activity and fiscal conditions.
Analysts also note that the IGP-M typically reacts faster to changes in commodity prices, exchange-rate swings and input costs than other inflation measures. Its sensitivity to the supply conditions of agricultural commodities means that a favourable set of harvests can quickly translate into lower wholesale inflation, as happened in 2025.
Looking ahead, the key questions for businesses and investors are whether the fall in wholesale prices will persist and how quickly consumer inflation will respond. Continued accommodation in global commodity markets, combined with stable domestic demand, would reinforce the downward pressure on the IGP-M. Conversely, renewed shocks to supply chains or exchange-rate volatility could reverse the trend.
Overall, the FGV reading provides a constructive signal for costs along Brazil’s production chains and offers potential breathing space for both producers and policymakers in 2026. Firms and agricultural producers should use the window to reinforce liquidity management and commercial strategies while monitoring price and policy developments closely.
Key Takeaways:
- IGP-M deflation Brazil 2025 closes at -1.05%, driven by a 3.35% fall in the IPA.
- Lower input costs could improve agricultural margins even as commodity prices remain subdued.
- Consumer and construction prices stayed elevated, keeping retail inflation higher than wholesale trends.
- Market attention shifts to 2026 as easing wholesale prices may create room for gradual monetary easing.
