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.
