Israel’s Inflation Dips in November, but Remains Above Target
Israel’s annual inflation rate fell to 3.4% in November, the lowest level since July, but still above the government’s 1%-3% target range. The consumer price index fell 0.4% in November from October on lower costs of fresh produce, transportation, shoes, and education, and entertainment. However, these decreases were partly offset by gains in the price of housing, food, and clothing.
The Bank of Israel has maintained its interest rate unchanged since January, citing geopolitical tensions, rising price pressures, and looser fiscal policy due to the war with the Palestinian militant group Hamas. Policy-makers have warned of rate hikes if inflation remains high.
The Israeli central bank is scheduled to decide on interest rates on January 6. Despite the 0.4% drop in the consumer price index, some analysts consider the data a sign that the trajectory of inflation may be changing.
“It’s a sign that the inflationary pressures are receding, and the risk of a rate cut in January is diminishing,” said Yonie Fanning, chief strategist at Mizrahi Tefahot Bank. “We could see a change in the interest rate announcement to a less hawkish tone.”