JERUSALEM (Reuters) – Israel’s inflation rate eased in September for the first time in seven months, data from the Central Bureau of Statistics showed on Tuesday, but it likely will not be enough to entice policymakers to reduce interest rates anytime soon.
The annual inflation rate dipped to 3.5% last month after hitting a 10-month high of 3.6% in August. It was slightly below expectations of 3.7% in a Reuters poll but still far exceeds the government’s 1%-3% annual target range.
Government officials have largely blamed war-related supply issues for the spike in inflation.
The consumer price index fell 0.2% in September from August led by lower costs of transport, entertainment, clothing and footwear and fresh fruit. These were only partly offset by gains in prices of fresh vegetables, education and furniture.
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 and September, 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 Nov. 25. Israeli central bankers have warned of rate hikes should inflation remain high.
