Is it obligatory to inform parents about a brother's disbelief, and how should one deal with him? Is it permissible to supplicate for worldly good for him?

The believer is tested, and among the trials is seeing loved ones in error. So, be patient with that and know that guidance is solely in the hand of Allah, "Indeed, you do not guide whom you like, but Allah guides whom He wills. And He is most knowing of the [rightly] guided." And continue to supplicate for his guidance.

Secondly: There is a difference between an apostate whose harm does not exceed himself, and with whom one can argue kindly, and an apostate who spreads his poisons and doubts within his surroundings. Your brother's case is of the second type. Therefore, you must be frank with your parents about this, and emphasize to him that if he chooses disbelief, that is his concern, but he should not conceal his disbelief from the family to spread his poisons. You must disassociate yourselves from his action and reduce interaction with him to the minimum, while continuing to supplicate for his guidance. Allah Almighty said: "O you who have believed, do not take My enemies and your enemies as allies, extending to them affection."