Inflation in Israel in March moved above the target of the government and the central bank for the third consecutive month, but did not increase, thus easing the pressure on central bankers to take immediate monetary tightening measures.
On an annual basis, the consumer price index stood at 3.5% in March, according to the Central Bureau of Statistics, at the same levels as in February. According to a survey by Bloomberg, the average forecast of 12 economists was for inflation of 3.7%.
The cost of clothing and footwear products, as well as services in the culture and entertainment sectors increased significantly, but prices for fresh fruit and vegetables escalated. On a monthly basis, inflation stood at 0.6%, also lower than forecast.
The central bank of Israel raised its key interest rate earlier in the week, which until then was close to 0%, in the first round of monetary tightening in a decade. Given that the target is inflation in the range of 1% to 3%, the key interest rate, which now stands at 0.35%, is expected to rise further in the coming months.
The steady supply of local gas to consumers keeps costs in check from rising commodity prices following Russia’s invasion of Ukraine.
A strong shekel could also be a bulwark against inflation, but the Israeli currency has fallen 3.5% against the US dollar in 2022, although it has recorded gains against the euro.
Source: Capital
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