By Steven Scheer
JERUSALEM (Reuters) – Israel’s inflation dipped in November, data from the Central Bureau of Statistics showed on Sunday, but staying above target and likely not enough to push policymakers to reduce interest rates anytime soon.
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. It was below expectations of 3.6% in a Reuters poll but still exceeds the government’s 1%-3% annual target range.
Government officials have largely blamed war-related supply issues for the spike in inflation the past year, when price pressures have eased globally.
The consumer price index fell a more than expected 0.4% in November from October on lower costs of fresh produce, transportation, shoes and education and entertainment. These were only partly offset by gains in the price of housing, food and clothing.
After cutting its benchmark interest rate in January, the Bank of Israel has left the 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’s war with the Palestinian militant group Hamas.
It next decides on rates on Jan. 6. Israeli central bankers have warned of rate hikes should inflation remain high. Prices on a host 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 trajectory than we have been accustomed to in recent months,” said Mizrahi Tefahot (TASE:MZTF) Bank chief strategist Yonie Fanning.
“Even if we probably won’t get a local interest rate cut in January, we certainly expect a change in rhetoric in the interest rate announcement (to less hawkish).”