Israeli inflation fell to a 4-month low of 3.4% in November By Reuters

Author: Steven Scheer

JERUSALEM (Reuters) – Israeli inflation fell in November, data from the Central Bureau of Statistics showed on Sunday, but remained above target and likely not enough to push policymakers to cut interest rates anytime soon.

The annual rate of inflation fell to 3.4% last month, the lowest level since July, from 3.5% in October and after hitting a 10-month high of 3.6% in August. It was below expectations of 3.6% in a Reuters poll, but still exceeded the government’s annual target of 1%-3%.

Government officials have largely blamed war-related supply problems for the spike in inflation over the past year, when global price pressures eased.

The consumer price index fell by a more than expected 0.4% in November compared to October due to lower costs of fresh produce, transportation, footwear and education and entertainment. This was only partially offset by higher housing, food and clothing prices.

After cutting its benchmark interest rate in January, the Bank of Israel left the rate unchanged at subsequent meetings in February, April, May, July, August, October and November, citing geopolitical tensions, mounting price pressures and looser fiscal policy due to Israel’s war with the Palestinian militant group Hamas.

The next step is a rate decision on January 6. Israel’s central bankers have warned of rate hikes if inflation remains high. The prices of many goods such as water and electricity, as well as some taxes, will increase in 2025.

“Today’s data alone reflects a different trajectory than what we’ve been used to in recent months,” he said Mizrahi Tefahot (TASE:) Chief Bank Strategist Joni Fanning.

“Even if we are unlikely to get a local interest rate cut in January, we certainly expect a change in the rhetoric in the interest rate announcement (to a less hawkish one).”