Israel's annual inflation rate rose unexpectedly in April to 3.6%, according to data on Thursday from the Central Bureau of Statistics that will likely keep policymakers from reducing interest rates soon.
Government officials have largely blamed war-related supply issues for a spike in inflation over the past year, even as price pressures eased globally. The central bank believes demand is also helping to keep prices high.
Annual inflation reached 3.8% in January, its highest level since September 2023. The central bank in April projected a 2.6% rate for 2025.
On a monthly basis, the consumer price index (ILCPI=ECI) rose by a bigger than expected 1.1% in April from March on higher costs of transportation, entertainment, fresh fruits, clothing and housing.
These were only partly offset by declines in the price of furniture and fresh vegetables. A Reuters poll had expected a 0.7% rise month-on-month.
The CPI's rise was widely expected since prices on a host of goods including water and electricity as well as some taxes have risen at the start of 2025.
At the same time, the statistics bureau adjusted its inflation basket by boosting the weighting of housing, telecommunications and transportation, while lowering the weighting for food.
The Bank of Israel has left its benchmark interest rate unchanged since cutting it in January 2024.
At its most recent April 7 policy meeting, it said there was too much global uncertainty over U.S. President Donald Trump's tariff war, and over Israel's war in Gaza, to lower borrowing costs.
The bank, which forecasts inflation easing in the second half of 2025, next decides on rates on May 26.
The shekel was 0.2% weaker versus the dollar at 3.55.
