© Reuters. FILE PHOTO: New Israeli Shekel banknotes and coins are seen in this picture illustration taken November 9, 2021. REUTERS/Nir Elias/Illustration/File Photo
JERUSALEM (Reuters) – Israel’s inflation rate edged down more than expected to 3.0% in December from 3.3% in November, the Central Bureau of Statistics said on Monday – its lowest level in two years which could support further central bank interest rate cuts.
A Reuters poll had expected the rate to ease to 3.1% last month. The consumer price index fell 0.1% in December from November.
Israel’s war against Hamas militants is weighing on economic growth and helping to bring down inflation back down, with the rate now within an official rate of 1-3% for the first time since December 2021.
The Bank of Israel earlier this month lowered its benchmark interest rate by 25 basis points to 4.5%, its first cut in four years. But it cautioned that looser fiscal policy due to higher defence spending could slow the pace of future reductions.