Israel: Consumer prices drop at quicker rate on an annual basis in December
January 15, 2021
Consumer prices fell 0.10% from the previous month in December, a softer drop than the 0.20% fall seen in November. Looking at the details of the release, prices for food fell in December. However, prices for transportation and communication rose.
Consumer prices decreased 0.7% year-on-year in December, following November’s 0.6% fall. The annual average variation of consumer prices fell to minus 0.6% in December (November: -0.5%). Lastly, core consumer prices fell 0.2% on an annual basis in December, which was a sharper fall than November's 0.1% decrease.
December’s reading leaves the overall picture little changed: price pressures remain extremely low, amid the strong shekel and shaky demand. This will reinforce the Central Bank’s loose monetary stance ahead. Turning to 2021, inflation is seen returning but remaining extremely subdued as shekel strength continues to weigh on prices, with inflation only rising back into the lower part of the Bank’s 1.0%–3.0% target range in H2.
Author: Oliver Reynolds, Economist