A pound of beans

BRAZIL ECONOMICS - Report 12 Feb 2026 by Alexandre Schwartsman, Cristina Pinotti and Diego Brandao

This Special Report explores the effects of agricultural production on food-at-home inflation. The topic has become increasingly relevant when we consider two aspects: the first is the Brazilian agricultural sector robust growth , accompanied by productivity gains; the second is the importance of the food-at-home sub-group for overall inflation dynamics, given its 15.3% weight in IPCA. With this in mind, we first estimate an impulse-response function from agricultural output on wholesale agricultural prices (IPA Agriculture). Next, following the work and methodology used by IPEA, we estimate the pass-through from IPA Agriculture prices to food-at-home inflation. The results indicate that an increase in agricultural output presents a negative and statistically significant impact in the third quarter after the production shock, with a cumulative impact, over this horizon, close to 0.45 p.p. on the IPA Agricultural. Considering a 65% pass-through to food-at-home prices over about two quarters, the impact of agricultural production on food-at-home inflation in the IPCA would be a cumulative reduction of approximately 0.30 p.p. within four to six quarters.

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