Written by Stephen Shear
JERUSALEM (Reuters) – Inflation in Israel declined in November, but remained above target and is unlikely to be enough to prompt policymakers to cut interest rates anytime soon, data from Israel's Central Bureau of Statistics showed on Sunday.
The annual inflation rate fell to 3.4% last month, its lowest level since July, from 3.5% in October and after hitting a 10-month high of 3.6% in August. The index was lower than expectations of 3.6% in a Reuters poll, but still exceeded the government's annual target range of 1% to 3%.
Government officials largely blamed war-related supply issues for the rise in inflation last year, when price pressures eased globally.
The CPI fell by a more-than-expected 0.4% in November compared to October due to lower costs for fresh produce, transportation, footwear, education and entertainment. This increase was only partially offset by gains in housing, food, and clothing prices.
After cutting its benchmark interest rate in January, the Bank of Israel left the interest rate unchanged at subsequent meetings in February, April, May, July, August, October and November, citing geopolitical tensions, rising price pressures and looser fiscal policy due to Israel. The war with the Palestinian Hamas movement.
The next decision on interest rates will be made on January 6. Israeli central bankers have warned against raising interest rates if inflation remains high. Prices for a range of goods such as water and electricity, as well as some taxes, are set to rise in 2025.
“Today's data alone reflects a different path than what we have become accustomed to in recent months,” he said. Mizrahi Tfahot (TASE:) Bank Chief Strategist Uni Fanning.
“Even if we probably can't cut domestic interest rates in January, we certainly expect a change in rhetoric in the interest rate announcement (to less hawkish).”
