Israel Inflation Rate Seen Reaching 14-Year High of 4.5% In June

An Israeli flag flutters outside the Bank of Israel building in Jerusalem August 7, 2013.. REUTERS/Ronen Zvulun
An Israeli flag flutters outside the Bank of Israel building in Jerusalem August 7, 2013.. REUTERS/Ronen Zvulun
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Israel Inflation Rate Seen Reaching 14-Year High of 4.5% In June

An Israeli flag flutters outside the Bank of Israel building in Jerusalem August 7, 2013.. REUTERS/Ronen Zvulun
An Israeli flag flutters outside the Bank of Israel building in Jerusalem August 7, 2013.. REUTERS/Ronen Zvulun

Israel's inflation rate in June is expected to reach its highest level in nearly 14 years and maintain pressure on policymakers to keep raising interest rates aggressively.

The consumer price index (CPI) in June was likely 4.5% higher than a year earlier, according to a Reuters poll of economists. That inflation rate, up from 4.1% seen in
May, would equal the figure of November 2008.

The data will be issued on Friday at 2 p.m. (1100 GMT). Economists say an expected rise of 0.5% in June over May would reflect price gains of flights, fuel and housing rents, partly offset by declines for clothing and fresh fruit.

The central bank projects average prices in all of 2022 to be 4.5% higher than last year. The forecast for 2023 is only 2.4%.

Although the central bank says some price pressure stems from global supply issues and commodity prices, policymakers remain concerned over a very low jobless rate of 3%, which is
pushing up wages.

Meanwhile, consumer demand remains robust and should contribute to 5% economic growth this year.

The Bank of Israel last week raised its benchmark interest rate by a half-point to 1.25%, the highest since 2013. It was the third straight increase.

Analysts project another half-point rise at the next meeting, on Aug. 22, with the key rate likely reaching at least 2.75% by next year.

Annual inflation in June hit 9.1% in the United States and 8.6% in the euro zone.

"We are determined not to let it (inflation) get into the ranges (seen) in Europe and the United States, and more than that, to return it during 2023 to the target," Bank of Israel Governor Amir Yaron told a conference this week.

Yaron said the Bank of Israel was under less pressure and not keeping pace with the US Federal Reserve.



Saudi Business and Job Growth Hit 14-Year High

Riyadh, Saudi Arabia (AFP)
Riyadh, Saudi Arabia (AFP)
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Saudi Business and Job Growth Hit 14-Year High

Riyadh, Saudi Arabia (AFP)
Riyadh, Saudi Arabia (AFP)

Business conditions in Saudi Arabia’s non-oil private sector improved notably in June, driven by a marked rise in customer demand and expanded production, according to the latest Riyad Bank Purchasing Managers’ Index (PMI) data.

New business volumes surged, fueling the fastest pace of employment growth since May 2011. This strong demand for workers pushed wage costs to record highs, adding pressure on overall expenses and contributing to a fresh increase in output prices.

The headline PMI climbed to 57.2 in June from 55.8 in May - its highest level in three months and slightly above the long-term average of 56.9. The reading signaled a robust improvement in the health of the non-oil private sector economy.

Companies reported another rise in new orders last month, with growth accelerating following a recent low in April. Many firms cited gaining new clients, alongside improved marketing efforts and stronger demand conditions. Domestic sales were the main driver of the increase, while export sales edged up slightly.

Purchasing Activity Expands

Production continued to expand through the end of Q2, although growth slowed to a 10-month low. Purchasing activity picked up sharply as companies sought to secure additional inputs to meet rising demand, with the pace of purchase growth reaching its fastest in two years.

Employment growth accelerated as businesses rapidly expanded their workforce to keep pace with incoming orders, pushing hiring to the highest level since mid-2011. This strong recruitment trend, which began early in 2025, was largely driven by a rising need for skilled workers, prompting companies to increase salary offers. Consequently, overall wage costs rose at the fastest rate since the PMI survey started in 2009.

Facing mounting cost pressures from higher raw material prices, firms raised their selling prices sharply in June , the biggest increase since late 2023, reversing declines recorded in two of the previous three months. This price hike largely reflected the passing of higher operating costs onto customers, although some companies opted for competitive pricing strategies by cutting prices.

Resilient Economic Outlook

Looking ahead, non-oil private sector firms remained confident about business activity over the next 12 months. Optimism hit a two-year high, supported by resilient domestic economic conditions, strong demand, and improved sales. Supply-side conditions also showed positive momentum, with another strong improvement in supplier performance.

Dr. Naif Alghaith, Chief Economist at Riyad Bank, said: “Future expectations among non-oil companies remain very positive. Business confidence reached its highest level in two years, underpinned by strong order inflows and improving local economic conditions.”

He added: “However, cost pressures became more pronounced in June, with wage growth hitting record levels as companies compete to retain talent. Purchasing prices also rose at the fastest pace since February, partly driven by increased demand and geopolitical risks. Despite these challenges, companies broadly raised selling prices to recover from May’s declines, reflecting an improved ability to pass higher costs onto customers.”