Inflation Slows to 1.1% Amid Ongoing Cost of Living Crisis
Translated & summarized from Behadrei Haredim by baba
Former Finance Minister Bezalel Smotrich claimed credit for Israel's inflation rate falling to 1.1%, the lowest since April 2021. However, the public still faces high living costs as prices for many goods, services, and rent continue to rise. While some sectors like fresh produce and clothing saw price increases in October, others like fruit and airfare decreased. Smotrich's policies, including a VAT hike and temporary fuel subsidies, are debated alongside other economic factors influencing inflation.
The story in 6 lines · by baba
- Israel's annual inflation rate dropped to 1.1% in October, its lowest since April 2021.
- Former Finance Minister Bezalel Smotrich attributed the inflation decrease to his economic policies.
- Despite lower inflation, prices for vegetables, clothing, and rent continued to rise.
- Rental costs increased by 2.8% for renewing tenants and 5.5% for new tenants.
- A 5.1% drop in airfare contributed significantly to the overall index decrease.
- Critics point to other factors influencing inflation and recent tax increases.
Former Finance Minister Bezalel Smotrich celebrated Israel's inflation rate dropping to 1.1%, attributing the decline to his economic policies. However, despite the slowing price increases, the public continues to face high living costs as prices for essential goods and services remain elevated. Smotrich stated on social media that the low inflation was not a surprise but the result of a "clear and persistent policy" he has pursued.
Official data from the Central Bureau of Statistics revealed that the Consumer Price Index fell by 0.1% in October, bringing the annual inflation rate down from 1.6% in September to 1.1%, its lowest point since April 2021. This figure indicates a slower rate of price increases rather than a decrease in prices themselves, meaning many items are still significantly more expensive than in previous years.
Specific sectors saw price hikes in October, including fresh vegetables (up 3.5%), clothing and footwear (up 4.1%), apartment maintenance (up 0.4%), and home furnishings (up 0.3%). The rental market also experienced continued increases, with renewing tenants paying 2.8% more on average and new tenants facing a 5.5% rent hike.
Conversely, some prices decreased, such as fresh fruits (down 2.8%), transportation (down 1.4%), and purchase prices for apartments (down 1.5% over the past year). A significant portion of the October index decrease was due to a 5.1% drop in airfare and overseas travel costs, which lowered the overall index by approximately 0.23 percentage points. This benefit was not felt by those who did not travel abroad.
Smotrich's economic policies have faced criticism previously, notably a temporary fuel price reduction before the recent elections, which ended shortly after, leading to a price increase. Experts noted that factors beyond Smotrich's control, such as Bank of Israel interest rate decisions, the dollar exchange rate, import prices, and global economic conditions, also influence inflation. Additionally, measures implemented during his tenure, including a VAT increase from 17% to 18% and the freezing of income tax brackets, along with war-related expenses, have increased public expenditures. While the inflation slowdown is positive news, it does not negate the substantial price increases experienced by families on housing, food, and basic services in recent years.
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