# Tomatoes 90% dearer push food inflation to a four-year high

Rain, heat and diesel make food more expensive, while October's IPCA rises just 0.14%. For economist Bráulio Borges, fiscal policy alone does not explain why Brazilian interest rates are among the highest in the world.

- Section: Business
- Published: November 13, 2026
- Address: https://ceoone.com.br/en/article/tomatoes-90-dearer-push-food-inflation-to-a-four-year-high
- Em português: https://ceoone.com.br/artigo/tomate-90-mais-caro-leva-a-inflacao-dos-alimentos-ao-maior-nivel-em-4-anos.md

![A heap of tomatoes of many types and shades, from yellowish green to red, on a market stall](https://pub-b80e49b2737940b3ab5d3f20d0578192.r2.dev/artigos/tomate-90-mais-caro-leva-a-inflacao-dos-alimentos-ao-maior-nivel-em-4-anos-foto.webp)

Photo: André Ganzarolli Martins/Wikimedia Commons (CC BY-SA 4.0)

## Key points

- Driven by tomatoes, onions, rice and meat, food and beverages rise 1.04% in October and 5.46% this year, the highest since 2022.
- Even so, the IPCA comes in at 0.14%, below forecasts, thanks to electricity and transport.
- Bráulio Borges shows that, even with a neutral fiscal impulse, Brazil's interest rate would sit 3.4 points above the benchmark because of how its debt and credit markets work.

Food is weighing on household budgets again. According to IBGE, the food and beverages group rose 1.04% in October, driven by tomatoes (19.57%), onions (11.29%), rice (4.81%) and meat (2.27%). Tomatoes had already climbed 37% in September and are up 90% this year. Onions have risen 80% in 2026 and more than 100% over twelve months.

Food and beverages have accumulated inflation of 5.46% this year, the highest for the period since 2022, and 5.73% over twelve months. Without them, October's IPCA would have shown deflation of 0.11%.

"Tomatoes and onions rose because of weather issues," says Fernando Gonçalves, the IPCA manager. Excess rain in tomato-growing regions brought harvest problems and disease to an extremely perishable item. For onions, the planted area shrank and higher temperatures multiplied diseases, reducing stocks. Meat prices are rising because fewer animals are available for slaughter, an effect of the cattle cycle, and because of stronger demand for protein.

One factor runs through the whole chain: diesel, more expensive because of the conflicts in the Middle East. "The price of diesel affects freight, and food reaches the consumer more expensive," Gonçalves sums up. At the other end, carrots (9.72%), potatoes (2.95%) and ground coffee (1.03%) fell. Coffee, which nearly doubled in price between January 2024 and June 2025, has dropped 21.28% since July last year.

## Headline inflation surprises on the downside

Despite food, October's IPCA rose 0.14%, after 0.82% in September, and came in below market expectations. The 35 analysts surveyed by Bloomberg projected between 0.18% and 0.50%, with a median of 0.25%. Over twelve months, however, inflation went from 4.58% to 4.63%, above the 4.5% ceiling of the target.

Relief came from the electricity bill. With the tariff flag switching from yellow to green, residential electricity went from a 7.98% rise in September to a 1.92% fall in October. Transport fell 0.59%, with airfares 9.21% cheaper and fuel down 0.31%: petrol fell 0.56% and vehicle gas 0.46%, while diesel and ethanol rose 1.66% and 1.02%.

Carlos Lopes, an economist at Banco BV who expected 0.26%, sees a better result than forecast. Food pressure was greater than estimated, but more than offset by declines in housing and transport.

## What fiscal policy does not explain

The data arrives as the country debates why its interest rates are so high. In an article in the same edition, economist Bráulio Borges, of LCA Consultores and FGV Ibre, challenges the most repeated explanation, that the government spends too much. There is truth in it, he writes, but the story is more complex.

![The headquarters of the Central Bank of Brazil, a dark tower of vertical lines, in the late afternoon in Brasília](https://pub-b80e49b2737940b3ab5d3f20d0578192.r2.dev/artigos/tomate-90-mais-caro-leva-a-inflacao-dos-alimentos-ao-maior-nivel-em-4-anos-banco-central.webp)

The Central Bank headquarters in Brasília. Photo: Banco Central do Brasil/Wikimedia Commons (CC BY 2.0)

In a study for the FGV Ibre blog, he compared Brazil with seven emerging economies that also use inflation targets: Mexico, Chile, Colombia, Peru, South Africa, Indonesia and the Philippines. To make the comparison fair, he discounted the real US interest rate, the global benchmark, and the risk premium investors charge each government. Even so, from 2001 to 2025 Brazil's real interest rate stood, on average, three percentage points above the others.

When he related this excess to the fiscal impulse, how much the government injects into or withdraws from the economy each year, the result came in two parts. First: in Brazil, each point of GDP in fiscal stimulus translates into interest rates 1.9 points higher, a relationship that does not appear in the other countries. The second is the surprise: even with a neutral fiscal impulse, the Brazilian rate would sit 3.4 points above the benchmark. In none of the others does that figure exceed 1.1.

South Africa helps solve the puzzle. It is the country whose fiscal picture most resembles ours, with debt at 78% of GDP and low savings, and there the rate with a neutral impulse would be only 0.2 point above the benchmark. What sets us apart, according to Borges, is how the debt and credit markets work. Half of Brazilian government bonds are floating-rate, paying the Selic itself; in South Africa, only 5%. Foreigners hold 10% of our real-denominated debt, against more than a quarter there. More than 40% of credit here is directed, with regulated rates that barely react to the Selic, as in farm and housing loans. And the banking spread is many times larger.

In practice, Brazil's interest rate behaves like that of a closed economy, set almost entirely by local savers, and monetary policy loses strength: when the Selic rises, holders of floating-rate bonds instantly become richer, and the Central Bank has to raise rates further to get the same effect on inflation. The fiscal consolidation needed today, of 2 to 3 points of GDP, could bring the real rate from the 8% of 2023 to 2025 to around 5.5% to 6% in 2027 to 2030. On its own, it would not bring us close to Mexico, Chile or South Africa.

Heterodox economists criticise the indexing of debt to the Selic and banking concentration; orthodox ones point to directed credit, a kind of half-price ticket, legal uncertainty, defaults and taxes on loans. For Borges, both sides are looking at the same variables. "The question is not whether fiscal policy matters, but what else matters beyond it."

## Sources and editorial notes

- Based on reporting by Folha de S.Paulo, November 13, 2026 edition, economy section, page A21: report by Eduardo Cucolo and article by Bráulio Borges; and report by Maeli Prado and Júlia Galvão.

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