| Amir Kahanovitz, Chief Economist, Phoenix-Excellence |
For December, it surprised by a monthly increase of 0.3% and an annual increase of 2.8%. But still describes selective inflation, which raises questions about its future.
Many sections and sub-sections remained very refrigerated, such as clothing and footwear, fruits and vegetables, or those that had cooled, such as hotels and even electrical equipment for the home.
Meanwhile in the US, a gray Friday in the macro data: a surprising decrease (1.9% – expected 0.1%), a decrease in the prices of products from the USA (1.8% – expected 0.3%), an unpleasant surprise in the survey of the University of Michigan (68.8 expectations 70.0 ) And a slight decrease (0.1% – expect 0.2%).
Retail sales were even weaker if you think about them in realistic terms (especially in light of vehicle and fuel inflation).
The weakness in the consumer survey was not from the delta or the spreading omicron strain, neither from the slowdown in China (local real estate, electricity problems, closures) nor from the escalating geopolitical threats in China / Taiwan and Russia / Ukraine, but mainly from inflation. Yes is becoming more tangible.
| A war between Russia and NATO may be inevitable
We are not political commentators, but U.S. National Security Adviser Jake Sullivan claimed on Thursday that the threat of a Russian invasion of Ukraine was “high.” That assessment was made after days of talks between Western powers and Moscow. Returning Russia to the status of an empire and not wanting to show fear of the West, has no real alternative but to invade Ukraine.
The West for its part can of course close its eyes, as it did in the Crimean peninsula, but then it will get the Russian army sitting in its development along with a deep rift in the NATO alliance (since it has already begun Ukraine’s absorption process with a commitment to join as early as 2008). Avoid?
| No matter what happens, recession, war, falls in technology stocks, Yo Nime It, the market estimates that the Federal Reserve will raise interest rates.
On Friday the weak macro data managed to crack expectations for a moment and the yield fell slightly but very quickly back to rise and even higher, also against the background of the words of Jamie Damon, CEO of JPMorgan Chase (NYSE 🙂 (Big Bank In the US) because market expectations for four interest rate hikes this year are short-lived expectations and he thinks they will go for six and even seven!
A number of economists have returned to talking about the possibility of a recession in 2022 along with inflation. Like for example the economist of the Bank of America (NYSE :), Michael Hartnett, who predicts interest rate shock in the economy this year, but such forecasts are on the margins.
Most forecasts talk of 3.5% in the US. The World Bank last week reduced its global growth forecast from 4.3% to 4.1%.
| The consumer price index in December was not just about price increases.
Food prices in Israel have recently received a lot of headlines about price increases, but these according to the index were mainly focused on four products: poultry, fish, oil, and dough products. In addition there are the prices of sugary drinks that started to trickle up even before the entry into force of the new tax, in January.
It is quite likely that in the coming months more products will be seen to rise in price, but precisely the prices of the “four” may become a weight.
In the background it is interesting that fruit and vegetable prices continue to fall, even with an unusual annual change. The “wage inflation” argument is also not reflected in the index. Labor-intensive items, such as home help, hairdressers, hotels and restaurants describe a mixed picture and even a total noticeable cooling in the rate of increase.
Price pressure continues to come mostly from abroad, despite the temporary drop in fuel prices in December. Car prices rose by another 1.2% and furniture prices by 1.4%.
In the local sector, we did see a sharp increase in the housing section, but this was largely supported by raising the purchase tax on real estate. To illustrate, the “NIS” subsection increased by an annual change of only 1.1%.
Bottom line, despite the surprise above, the December index does not describe a further rise in the inflation environment – and we are left with our estimate of annual inflation of 2.3%.
The writer is the Chief Economist of Phoenix-Excellence. This review is provided as a service to readers only, and should not be construed as an offer, recommendation, substitute for the reader’s professional judgment or investment advice or investment marketing, purchase and / or sale and / or holding of the securities and / or financial assets mentioned or of securities and / Or any other financial assets.