JERUSALEM (Reuters) – Inflation in Israel rose to its highest level in nearly a year in August, data from the Central Bureau of Statistics showed on Sunday, narrowing the prospect of further interest rate cuts in the near future.
Annual inflation rose to 3.6% last month from 3.2% in July, the highest level since October last year. It was well above expectations of 3.2% in a Reuters poll and well above the government’s annual target of 1-3%.
Government officials blame the spike in inflation largely on war-related supply problems.
The consumer price index rose a stronger-than-expected 0.9% in August from July, supported by higher costs for fresh produce, food, housing, transportation, education and entertainment. These were only partly offset by declines in clothing and footwear, telecoms and furniture.
After the Bank of Israel cut its key interest rate in January, it left it unchanged at subsequent meetings in February, April, May, July and August, citing geopolitical tensions, rising price pressures and looser fiscal policy in the wake of Israel’s war with the Palestinian militant group Hamas.
A decision on interest rates will be made on October 9. Israel’s central bankers have indicated that they do not expect a rate cut until 2025.
(Reporting by Steven Scheer; Editing by Christina Fincher)