For the first time in five months, Israel’s inflation rate went up in April. Prices not including housing were up 0.6 percent, and even without energy costs, prices were 0.3 percent higher than the month before. In the past 12 months, prices have fallen 0.9 percent.
The price increases were welcome news, as fears had been mounting that Israel was likely to fall into the same ongoing negative inflation “trap” that has been at play in many countries in recent years – resulting in zero or even negative interest rates as governments attempted to jump-start economies, said economists.
Prices were higher in almost every category, including clothing (3.7 percent), culture and entertainment (2.1 percent) and transportation (1.7 percent). Housing was also up by 0.2 percent, leveling off from much higher rates in recent months.
Speaking to Channel Two, economist Yonatan Katz said that while prices were likely to go up slightly in May as well – mostly due to clothing costs – the long-term forecast is for continued negative inflation, due to a slowing economy in the U.S. “We expect that in the near future Israeli-issued bonds will fetch a premium of 0.1 percent to 0.2 percent” – meaning that bondholders will have to pay the government for holding their money in a safe vehicle.