Israel’s inflation remained at the highest since 2008, despite the central bank embarking on its longest cycle of interest-rate hikes in decades.
(Bloomberg) —
Israel’s inflation remained at the highest since 2008, despite the central bank embarking on its longest cycle of interest-rate hikes in decades.
Consumer prices rose an annual 5.3% in December, matching a similar figure the month before, according to figures released by the Central Bureau of Statistics on Sunday. Large increases were recorded in the cost of transportation and communication, housing, apartment maintenance and food last year.
December’s increase was just below the median forecast of economists surveyed by Bloomberg, as was the monthly inflation rate, which reached 0.3%.
Read: Israel Kicks Off Year by Hiking Rates to Highest Since 2008
Israel’s central bank has been engaged in a months-long monetary tightening cycle to tackle soaring inflation, which rose above the government’s 1%-3% target range in January 2022. After a prolonged period of “front-loading,” the Bank of Israel recently began slowing the pace of its hikes.
Its research team this month predicted inflation would slow to an annualized 3% in 2023 due to lessening demand, restraining monetary policies in Israel and abroad and “the continued moderation of supply-side pressures.”
Plans by Israel’s new government to tackle rising living costs, which include limiting planned increases for prices of electricity, water, fuel, as well as property taxes, will likely also slow inflation, Bank Hapoalim said in a note to investors.
Read: Bank of Israel Is Ready to Act If Shekel Ruins Inflation Outlook
Bank of Israel Governor Amir Yaron recently told Bloomberg News that consumer prices will likely grow faster in the next two months, before slowing toward the target rate in the second half of the year.
–With assistance from Harumi Ichikura.
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