Israel Inflation Falls to 3.1% in May, Lowest Since June 2024

Inflation rates in both the UK and Israel showed signs of easing in May 2025 but remain above or near target levels, reflecting ongoing economic pressures. In the UK, inflation slightly dropped to 3.4%, marginally down from 3.5% in April, with transport and household goods contributing to the decline; however, core inflation and services inflation remain high, suggesting persistent challenges and a real risk of stagflation. Analysts expect the Bank of England to hold interest rates steady due to these conditions, although a fall in the energy price cap later in the year could provide some relief to consumers. Meanwhile, Israel experienced a more pronounced decrease in inflation to 3.1% in May from 3.6% in April, reaching its lowest level since June 2024 and nearing the government's target range of 1% to 3%. This decline was driven by significant drops in transportation costs, particularly foreign travel and flights, as well as fresh vegetables and housing services, although increases in fresh fruit, clothing, and rents partly offset these gains. The easing inflation in Israel has led analysts to anticipate a possible cut in the central bank's base interest rate, which has been steady since January 2024.