📉 Israel inflation eased to 3.1% in May amid strong shekel & war impact. Bank of Israel may cut rates in August. #IsraelEconomy #Inflation #MiddleEast #Shekel

📉 Israel Inflation Slows to 3.1% in May – Rate Cut Talk Heats Up

Israel's annual inflation eased to 3.1% in May, down from 3.6% in April, moving closer to the Bank of Israel's 1–3% target range :contentReference[oaicite:1]{index=1}.

This slowdown was driven by a 2.4% drop in transport costs—led by a sharp 7.9% fall in travel prices—as well as reduced prices in fresh vegetables and housing services :contentReference[oaicite:2]{index=2}.

Since the Iran conflict began mid-June, the shekel has strengthened by ~8%, reducing risk premiums sharply :contentReference[oaicite:3]{index=3}. Economists now see room for a possible rate cut as early as August, although most expect it by August 20 :contentReference[oaicite:4]{index=4}.

Despite wartime pressures, Israel's Q1 economy grew at ~3.7% annualized :contentReference[oaicite:5]{index=5}. While continued conflict in Gaza could drag GDP growth, easing inflation and falling risk premiums support a cautious shift in policy :contentReference[oaicite:6]{index=6}.

🔎 What This Means

• A rate cut could boost consumer purchasing power amid high war-footing spending.
• Shekel strength helps dampen imported inflation.
• Fiscal risks remain if conflict drags on, but economic resilience is visible.

📊 For real-time inflation data and financial market moves, stay tuned.