IPCA-15 Slows Down in July 2025: Ignoring the Next Stock Market Rally Is a Luxury Few Can Afford, Says Analyst

• Why Is the IPCA-15’s Deflation a Big Deal?
• Is Now the Time to Invest in Brazilian Stocks?
• Which Stocks Could Benefit from the Rally?
• How Can Investors Access These Opportunities?
• FAQs

After two years of relentless inflation, Brazil’s IPCA-15—the leading inflation indicator—finally brought some relief in July 2025. The index recorded a deflation of -0.14%, driven largely by a -1.13% drop in housing costs, thanks to a -4.93% decline in electricity prices. Analysts from the BTCC team argue that this trend, combined with other macroeconomic factors, makes Brazilian stocks an almost unavoidable investment opportunity. Here’s why.

Why Is the IPCA-15’s Deflation a Big Deal?

The July 2025 IPCA-15 data marked the first deflation since July 2023, with the year-to-date inflation rate dropping to 3.26%. It’s also the first time since February that the 12-month cumulative inflation fell below 5% (4.95%). According to Matheus Spiess, an analyst at Empiricus Research, this isn’t just a statistical blip—it’s a symbolic shift. Lower inflation expectations, as reflected in the Central Bank’s Focus survey, suggest that Brazil’s monetary policy could ease sooner than expected, potentially paving the way for a Selic rate cut as early as December 2025.

Is Now the Time to Invest in Brazilian Stocks?

With inflation cooling and interest rates likely to follow, Spiess believes that ignoring the Brazilian stock market’s potential upswing is a luxury few investors can afford. The combination of undervalued equities, a possible U.S. rate cut, and improving fiscal credibility could trigger a rally in domestic risk assets. However, he cautions that political uncertainties remain a wildcard, so diversification and risk management are crucial.

Which Stocks Could Benefit from the Rally?

Empiricus Research has identified 10 Brazilian stocks poised to capitalize on this momentum. These companies are profitable, growing, and well-positioned to protect investors’ portfolios while delivering capital gains. Notably, their recommended portfolio has outperformed the Ibovespa by 42% year-to-date, with a 15.1% return compared to the index’s 10.6%.

How Can Investors Access These Opportunities?

For those looking to ride the wave, Empiricus is offering a free portfolio of these 10 stocks—no strings attached. Given the macroeconomic tailwinds, Spiess argues that taking an optimistic stance on Brazilian equities is one of the few viable strategies left after years of lackluster returns.

FAQs

What caused the IPCA-15’s deflation in July 2025?

The deflation was primarily driven by a temporary reduction in electricity prices due to a non-recurring bonus from Itaipu, Brazil’s largest hydroelectric plant.

How does lower inflation affect the stock market?

Lower inflation reduces perceived risk and increases the likelihood of interest rate cuts, making equities more attractive compared to fixed-income assets.

What are the risks of investing in Brazilian stocks now?

Political volatility and fiscal uncertainties remain key risks, though improving macroeconomic conditions could offset these concerns.