Israel’s annual inflation rate falls to 2.6%

Israel’s Shopper Worth Index (CPI) was unchanged in January. Within the twelve months to the tip of January, the speed of inflation fell to 2.6% from 3% in 2023. The decline is consistent with analysts’ expectations that the annual inflation charge would fall to 2.6-2.7% in January.

The clothes and footwear merchandise and the leisure and tradition merchandise each fell by 1.0% final month. Recent produce costs fell by 0.5%, and the transport merchandise fell by 0.4%.

The Central Bureau of Statistics has additionally revealed the change in house costs (which aren’t a part of the final CPI) between October-November 2023 and November-December 2023. On common, costs rose 0.7%. Within the breakdown by area, costs fell by 1.3% in Jerusalem, and rose by 1.2% in Haifa, by 1.6% within the heart, and by 0.8% within the south. In Tel Aviv, costs had been flat.

Costs of latest houses rose by a median of 0.9%.

Within the comparability between November-December 2023 and November-December 2022, the index of housing costs fell 1.4%. Costs fell by 4.4% in Tel Aviv, by 1.3% in Jerusalem, by 0.8% within the central area, and by 0.1% within the south. Costs rose by 3.3% within the northern area and by 0.3% in Haifa.

The index of latest house costs fell 2.7%.

The Phoenix Holdings chief economist Matan Shitrit explains the implications of falling inflation in Israel for the Financial institution of Israel’s rate of interest coverage: “The analysts’ forecasts took into consideration a seamless development of decline within the annual inflation charge, however regardless of the autumn, the possibilities of an rate of interest reduce within the subsequent determination stay low. In our view, the method of decreasing rates of interest might be cautious and sluggish, and the Financial institution of Israel will observe strikes by the US Federal Reserve and the European Central Financial institution, the place the expectation of the beginning of a technique of chopping charges is turning into extra distant. The forecast by the Financial institution of Israel Analysis Division for the financial institution’s rate of interest on the finish of 2024 of three.75-4.00% additionally factors to a really gradual course of.

“So far as the affect of Israel’s sovereign credit standing on rates of interest is anxious, it’s clear that the ranking downgrade was priced in by the markets, which remained steady, whereas the shekel strengthened, which provides a inexperienced gentle for additional rate of interest cuts. Nonetheless, whereas current CPI readings had been affected by a pointy fall in demand, present information point out a reasonably sharp restoration in financial exercise, which signifies that the deflationary issue might dissipate. As well as, inflation forecasts for the following twelve months, which already pointed to stickiness in inflation, will now begin to issue within the rise within the VAT anticipated in January 2025. We estimate that the VAT hike will contribute 0.5 share factors to the CPI – 0.2 share factors in January 2025 and the remaining within the following months.”

Printed by Globes, Israel enterprise information – en.globes.co.il – on February 15, 2024.

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