1. Central Bank raises Selic to 12.25% and hints at more increases in 2025

In its last meeting of 2024, the Central Bank’s Monetary Policy Committee (Copom) decided to increase the Selic rate by 1 percentage point, bringing it to 12.25% per year. The unanimous decision is the result of an intensified effort to combat inflation, driven by a more adverse economic scenario, with rising projections for the IPCA and signs of an overheated economy.

The Central Bank foresees further adjustments of the same magnitude in the meetings scheduled for January and March 2025, which would raise the Selic rate to 14.25% – the highest level since the economic crisis of 2015–2016. Copom’s statement also highlighted worsening inflation expectations and the need for a more restrictive monetary policy to align inflation with established targets. Additionally, Brazil has risen to the second position in the global real interest rate ranking, at 9.48%, behind only Turkey.

Folha: BC faz choque de juros, eleva Selic a 12,25% ao ano e prevê mais dois aumentos de 1 ponto
G1: Com nova alta da Selic, Brasil sobe para 2º no ranking de maiores juros reais do mundo; veja lista

2. IPCA growth slows to 0.39% in November amid small increases and higher electricity costs

The Broad Consumer Price Index (IPCA) rose by 0.39% in November, slowing compared to October’s 0.56%. Year-to-date inflation reached 4.29%, while the 12-month rate increased to 4.87%, up from 4.76% in the previous period.

November’s inflation was driven by significant increases in the Food and Beverages category, which rose by 1.55%, propelled by an 8.02% surge in meat prices, along with other products such as soybean oil (11%) and ground coffee (2.33%). On the other hand, items like mangoes (-16.26%) and onions (-6.26%) recorded declines.

The main factor easing inflationary pressure came from residential electricity, which dropped by 6.27% due to the adoption of a lower tariff, reducing the Housing group by 1.53%. In Transportation, a 0.89% increase was driven by a 22.65% rise in airfares, despite a 0.15% decline in fuel prices. Personal expenses also contributed to the overall rise, with cigarette prices surging by 14.91% following a tax hike

Agência IBGE: IPCA foi de 0,39% em novembro
O Globo: IPCA: carnes têm aumento de 8,02% em novembro

3. Senate approved Tax reform with adjustments to tax benefits

On Monday (9), the Senate’s Constitution and Justice Committee approved the first regulatory bill for the tax reform, introducing significant changes to the application of the Selective Tax, also known as the “sin tax.” Firearms and sugary beverages were removed from the list of taxed goods, thereby reducing the tax burden on these items. This adjustment, along with other granted fiscal benefits, is expected to raise the average tax rate for non-benefited sectors, now estimated at a minimum of 28.67%.

The sectors receiving benefits include the Manaus Free Trade Zone, Football Corporations (SAFs), agribusiness, and health cooperatives. The bill also reduced the tax rate by 60% for sanitation, veterinary services, unprocessed agricultural products, cookies, biscuits, and mineral water. For basic household items, there have been adjustments in taxation of yerba mate and bread.

The text will now be submitted to a Senate vote, followed by the assessment of the Chamber of Deputies, before being sent for Presidential approval.

Folha: Reforma tributária é aprovada em comissão do Senado, que retira armas e refrigerantes do ‘imposto do pecado’
G1: Reforma tributária: relator coloca armas em ‘imposto do pecado’ e mantém isenção a carnes

4. Pix solidifies its position as Brazil’s leading payment method, setting daily transaction record

PIX, the Central Bank’s instant payment system, achieved a historic milestone with 250.5 million transactions in a single day, moving R$ 124.3 billion on December 6th. The previous record, 239.9 million transactions, was set on November 29th of this year.

A Central Bank survey revealed that PIX is now the most widely used payment method in Brazil, cited by 46.1% of respondents, surpassing cash, which fell to 22%. Its popularity stems from its ease of use, security, and low cost, making it a standout choice across various usage categories. The survey also highlighted shifts in income reception methods, with 72% of payments now made directly to bank accounts, while the use of cash dropped to 15.5%.

These findings indicate a transformation in Brazilians’ financial habits. The majority of respondents (53.4%) believe cash will see little to no use within the next five years, underscoring the growing digitalization of transactions in the country. By offering speed and convenience, PIX has played a central role in this shift, firmly establishing itself as an essential part of Brazil’s financial system.

G1: PIX bate recorde e registra 250 milhões de operações em um só dia
E-Investidor: Pix é a forma de pagamento mais usada no Brasil, aponta Banco Central

5. Largest percentage of Brazilians renting homes in 42 years, IBGE reports

The 2022 Census revealed that 20.9% of the Brazilian population now lives in rented properties, the highest percentage recorded since 1980. This represents a significant increase from 16.4% in 2010, with the number of people in rental households reaching 42.1 million, a 35% growth over 12 years. Meanwhile, the proportion of Brazilians residing in owned properties dropped to 72.7%, the lowest level since 1991, reflecting a shift in the country’s housing conditions.

Despite the rise in renting, the data also pointed to improvements in housing quality. Currently, 87% of Brazilians live in homes constructed with finished materials, such as bricks or adobe, compared to 79% in 2010. Including unfinished masonry houses, this figure climbs to 94.6%.

These improvements indicate progress in access to better housing, though challenges persist in more vulnerable areas. While the standard of living in residences has advanced, the census also highlights significant disparities in housing conditions across the country’s regions, underscoring the ongoing inequalities that characterize Brazil’s social landscape.

Valor: População brasileira tem maior percentual vivendo de aluguel em 42 anos, diz IBGE
O Globo: Condições de moradia melhoram em 12 anos, e 87% dos brasileiros já moram em casas com revestimento