Prices keep rising in Israel with the Central Bureau of Statistics in February showing that prices on fresh vegetables and fruits were up 3.8%, culture and entertainment costs were up 0.9%, transportation rose 0.5% and housing was up 0.4%.
In the housing sector, renewal of rental contracts rose 4.4% while rents in new-tenant contracts increased 7.5%.
On the other hand, prices on clothing and footwear went down by 3.3% in February.
Israel’s annual inflation remained high, although it fell slightly from 5.4 % in January to 5.2% in February.
While analysts expected an annual inflation rate of 5%, it is higher than the government’s target range of 1-3% for price increases.
In February, the Bank of Israel increased interest rates for the eighth time, raising the key lending rate to 4.25%, its highest level since 2008.
“We are absolutely determined to bring inflation back down to its target and if that means continuing raising rates, and that is our primary tool, that’s what we will do,” Bank of Israel Governor Amir Yaron told CNN in an interview on Tuesday.
“We have a thriving economy partly because of the growth and investment in the high-tech sector which allows for more consumption and for more spending. That means that it will take a little bit more pain, probably, in order to bring inflation back down to its target,” Yaron said. “Our job to take inflation down today involves pain and in Israel it involves direct pain because many of the mortgages are tied down directly to the central bank interest rate.”
Israel's Bank Leumi chief economist Gil Bufman reported that inflation in Israel is not declining.
“Inflation in Israel, which is hardly slowing down, is beginning to look unusual compared to other countries, where inflation is declining, and this will be reflected in the continued increase in the Bank of Israel interest rate, even after central banks around the world have already completed the course of rate hikes,” Bufman said.
The All Israel News Staff is a team of journalists in Israel.