Israel’s Inflation Reaches 10-Month High in August, Rising to 3.6%

Israel’s inflation rate surged to 3.6% in August, marking its highest point in 10 months, according to the Central Bureau of Statistics. This sharp increase is likely to delay any immediate cuts in interest rates.

The inflation rate rose from 3.2% in July to 3.6% in August, far above the government’s target range of 1-3%. The unexpected rise in inflation is largely due to supply chain issues, driven by the country’s ongoing geopolitical situation.

Key contributors to the inflation increase include the rising prices of essential goods like food, fresh produce, housing, transportation, education, and entertainment. Despite some relief with falling prices in clothing, footwear, telecom services, and furniture, the overall inflation rate jumped by 0.9% between July and August.

In response to these economic pressures, the Bank of Israel has opted to maintain its current interest rates. After cutting rates in January, the central bank has kept them unchanged due to rising price pressures and the country’s political challenges. Analysts suggest that interest rates are not likely to decrease before 2025.

This inflation spike has heightened concerns about the cost of living in Israel. Policymakers are under increasing pressure to address these rising prices while trying to protect the country's economic stability. The focus now is on finding ways to manage the inflationary impact on average households.

Also Read: Israel Lowers 2024 Growth Forecast Due to Gaza Conflict