Israel inflation rate at 1.4 percent in July

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TEL AVIV (Reuters) – Israel’s annual inflation rate rose for the 11th straight month in July, data from the Central Bureau of Statistics showed on Wednesday, staying within the government’s target range.

In June inflation had moved above the 1 percent level for the first time in more than four years.

The consumer price index <ILCPIY=ECI> showed prices gained 1.4 percent from a year earlier, versus a 1.3 percent increase in June.

Inflation in 2017 was 0.4 percent, as prices in the full year rose for the first time since 2013.

Compared with June, consumer prices <ILCPI=ECI> were unchanged in July. Price gains in fresh fruits and vegetables, transportation and food were offset by declines in clothing and footwear and health.

Expectations that inflation would stay below the government’s 1-3 percent target in the near term drove the Bank of Israel to cut benchmark interest rates in early 2015 to 0.1 percent from 0.25 percent.

The bank has since held the rate steady and projects an inflation rate of 1.2 percent in 2018.

The bank’s next rate decision is scheduled for Aug. 29.

Bank of Israel economists believe the benchmark interest rate will remain at 0.1 percent for most of this year, rising in the fourth quarter to end 2018 at 0.25 percent.

Central bank chief Karnit Flug has said rates likely will not rise until inflation is entrenched within its target range.

Read more >>Israeli rate outlook clouded by uncertainty over next central bank chief

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