The trend continues: tomorrow at 18:30 the Central Bureau of Statistics will publish the consumer price index for the month of December, which according to most estimates is expected to increase by 0.4%-0.3%.
This will leave annual inflation at its highest level since October 2008 - 5.4%-5.3%.
However, most economists predict that in the coming year inflation will return to the target range of the Bank of Israel and fall below the 3% threshold.
refueling
The price is expected to decrease in the future, photo: Rafael Ben
The main components that are expected to contribute to the increase of the index are the prices of food, rent and fuel, which increased in December by almost 40 agora.
The measures presented last week by Prime Minister Netanyahu and Finance Minister Smotrich - the freezing of the "inflation generators" (water, electricity, fuel, and property tax) - are expected to start having an effect starting with the following indicators. We will remind that as a result of the plan's measures, the electricity tariff will increase by 2.5% from January instead of in 8.2%, the water rate will increase by 1% instead of 3.5%, fuel will be cheaper by 1.3%, and the property tax rate will remain unchanged.
Accordingly, the economists have already updated the forecasts for the months of January and February downwards.
The chief economist of Leader Capital Markets, Yonatan Katz, notes that "our inflation forecast has been updated to 0.1%-0.0% in January, compared to 0.3% before and to 0.1% in February - this is on the assumption that the tax on soft drinks and disposable utensils will be canceled at the beginning of February , and to 2.8% a year ahead. The sharp appreciation in the shekel of the past week also moderates the inflation forecast."
Katz adds: "We understand that the funding for most of the moves will come from a compensation fund for natural and war damage. In the meantime, the package of measures does not really threaten fiscal credibility, although it is not clear where the funding will come from in the following years after the compensation fund is used up. The more real threat is the program for free early childhood education , the cost of which is estimated at 13 billion shekels."
Modi Shafferer, chief financial markets strategist at Bank Hapoalim, says in reference to the effect of the government's decisions on the index that "the January index forecast drops slightly to 0.1%", and notes that "the municipal tax component is expected to lower the index sharply. Also the increase in electricity prices by 2.5% Instead of 8.2%, you will moderate the increase in the index in January as well as the indirect price increases that were expected during the year."
Photo: The traders move to Wall Street // The traders move to Wall Street,
Changing trend in the US
And if in Israel inflation has apparently not reached its peak yet, in the US they are already celebrating the change of direction. The consumer price index in December fell by 0.1%, for the first time in a year. In the last 12 months, the American index rose by 6.5% - the lowest rate Since October 2021.
According to Ronan Menachem, Chief Market Economist at Bank Mizrahi-Tefahot, "The annual rate of inflation in the US has been falling consistently for six months since it rose to 9.1% in June of last year.
This figure points to a change in the direction of inflation, although it should be noted that the distance from the target level of 2% is still large, so from the point of view of the US Federal Bank, there is still work to be done. From the market's point of view, this is positive but not surprising news.
"In my estimation, there is nothing in the data to change the estimates that the interest rate will rise at the beginning of next month as well, but they pretty much guarantee that the increase this time will be more moderate."
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