The latest data indicated a higher-than-expected increase, by 0.8 per cent versus expectations of 0.4 per cent. The banks' projections are that inflation will nevertheless decline over the next 12 months to 3.3 percent.
The problem reflected in the inflation forecasts or the current inflationary situation is political. The coalition allocations, mainly to the ultra-Orthodox parties, plus the Shas project with food stamps, are perceived as a policy of subsidizing populations. This is a spiral of indiscipline in the economy, originating in the government.