Downside inflation surprise but rental prices accelerate

ISRAEL - Report 16 Dec 2024 by Jonathan Katz

1. November’s downward inflation surprise is expected to increase the likelihood of a first rate hike in early Q2 2025 (or possibly end-Q1 2025).

2. Inflation in 2025 will be mostly due to the government's fiscal adjustments, while easing supply constraints and a strong shekel will push inflation lower.

3. Strong tax revenues and fiscal adjustments are likely to push the fiscal deficit to 5% GDP or below in 2025.

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