A Reuters poll had expected the rate to ease to 3.1% last month. The consumer price index fell 0.1% in December from November.
Israel’s war against Hamas militants is weighing on economic growth and helping to bring down inflation back down, with the rate now within an official rate of 1-3% for the first time since December 2021.
The Bank of Israel earlier this month lowered its benchmark interest rate by 25 basis points to 4.5%, its first cut in four years. But it cautioned that looser fiscal policy due to higher defence spending could slow the pace of future reductions.
