Is the high index a warning sign against inflationary dizziness?

Rising inflation.

Do we have cause for concern?

The consumer price index jumped this year, but the Bank of Israel believes that we are still within the target of inflation.

Prof. Omer Moav of Reichman University and Dr. Sigal Ribon, Director of the Monetary Division of the Research Division of the Bank of Israel, explain

Between Ashkenazi

19/01/2022

Wednesday, 19 January, 2022, 09:57 Updated: 10:18

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Last weekend, the Central Bureau of Statistics published the Consumer Price Index, which shows that the index rose by 0.3% in December 2021. Although the inflation rate is moderate compared to most of the world economies, it is also worrying, since it was three times the estimates that preceded the publication of the index.

The increase completed a year with 2.8% inflation, which is an 11-year inflation record. It is true that this is not an inflationary spin, but those who remember the days of the great inflation of the mid-1980s can not help but fear, especially when inflation in the US, for example, also evoked memories of that decade of Ronald Reagan's days in the White House. It has not been registered since 1982.

In 2003, the Government of Israel adopted a decision, following the economic crisis that Israel was in, according to which the Bank of Israel must maintain an inflation target of 1% to 3% according to the Consumer Price Index, and the Bank of Israel estimates that this target will be maintained. Also in the coming years.

So do we have anything to fear? We went out to check with the experts:

, explains: "I think it is very important to make a distinction between real price increases and an inflationary process and public discourse ignores this important difference.

Inflation is a process where we experience general price increases Increase in our revenues. That is, if governments pour a lot of money, print money, and increase the amount of liquidity then under normal conditions of economy and not of a severe global crisis a process of inflation is created. People do not want to hold much money and instead they buy assets or products "So, in fact, we can say that inflation is a process that costs everything."

"On the other hand," Moab explains, "we have other factors like corona that also creates shortages in the global supply chain. So we are experiencing a real rise in prices. This translates into harm to the quality of life. "

Asked by Walla where we stand today, in a situation of real inflation or inflation, Prof. Moav replied: "It is difficult to know who is in front of all the data and can give a clear answer to this question."

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Prof. Omar Moab.

Distinguishes between real price increases and inflation (Photo: Flash 90, no)

"Everything is fine and we are within the target"

So on the advice of Prof. Moab, we referred the question to an expert from the Bank of Israel and spoke with

, who said: "Inflation has risen 2.8% this year.

Within this target sometimes inflation is higher and sometimes it is lower, and sometimes it deviates from the target

.

In recent years, inflation has been low and even negative, and now it is close to the upper limit

. "Nana before that was 0.7% in total. In the last twenty years, it can be said that Israeli consumers enjoy a stable inflation environment."

"The significant part that explains the increase," adds Dr. Ribon: "These are global things that do not depend on the Israeli economy alone.

Once there are bottlenecks in the supply chain it causes an increase in commodity prices.

In addition, there has been a rise in oil prices affecting car fuel prices.

World commodity prices and energy prices. "

So where do we stand today?" According to the Research Division's Inflation in 2022 will be 1.6% and in 2023 - 2%.

In general, our perception is that stabilization and moderation in the rate of inflation will remain in the target range, and it is interesting to say that there will probably also be a moderation in inflation in the world. "

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• inflation

• Bank of Israel

• measure

• Consumer price index