Israel’s annual inflation topped all forecasts as it accelerated to the highest level since October 2008, adding urgency to the central bank’s cycle of interest-rate increases.
Spurred by a rise in the cost of fresh fruit and transportation, prices unexpectedly jumped an annual 5.2 percent in July from 4.4 percent in June, according to data released on Monday. The median forecast in a Bloomberg poll of 15 economists was 4.6 percent.
Inflation has been stuck above the government’s 1 percent to 3 percent target since January. On a monthly basis, price growth reached 1.1 percent in July, nearly twice the median prediction in another Bloomberg survey.
Israel’s central bank has tried to get ahead of inflation by moving aggressively to tighten monetary policy, delivering three consecutive rate hikes including the largest since 2011. Its next meeting is in a week.
The outlook for Israeli inflation was turning favorable after gains in the shekel in recent weeks. But the currency depreciated sharply on Monday and traded 1.3 percent weaker against the dollar as of 7:09 p.m. in Tel Aviv.