Fuel Prices Surge by 0.13 Shekel - Reaching the Highest Level of prices in the past year

In the wake of the cancellation of the fuel tax discount in Israel, citizens are bracing for a rapid escalation in fuel prices, further burdening their wallets. Effective midnight tomorrow, the price hike will see a liter of 95 octane fuel in self-service stations soar by 13 agora to NIS 7.51, while full-service options will spike to NIS 7.73.

The southern city of Eilat, known for its tourist appeal and strategic location, will witness a surge in fuel costs as well. Despite efforts to cap the maximum price per liter of Octane 95 fuel at self-service stations to NIS 6.42 (excluding VAT), consumers will still face an increase of 11 shekels, with the full-service surcharge remaining unchanged at 19 shekels (excluding VAT).

Since the inception of the tax discount cancellation on January 1, fuel prices have spiraled upwards by a staggering 57 cents. This surge, coupled with the cancellation, has contributed to a 0.3% uptick in the consumer price index from January to March. The relentless climb in fuel prices unfolded with an increase of 28 cents in January, followed by 16 cents in February, and now a further 13 cents.

The recent calculation of fuel prices across the Mediterranean basin, spanning five days, has revealed a notable change compared to the previous month. Fuel prices in the region surged by 7% to 8%, attributing to the current uptick in local prices. Notably, the dollar exchange rate has remained stable, holding at NIS 3.65 during the price determination period in February.

Amidst concerns over inflationary pressures, senior officials at the Ministry of Finance and Energy Minister Eli Cohen have sounded alarm bells. The fear looms that rising fuel costs may stoke inflationary pressures, hindering the potential for further interest rate reductions by the Bank of Israel in the coming months. Despite recent moderation in inflation to 2.6%, the ascent in fuel prices threatens to exacerbate the situation, prompting the governor of the Bank of Israel to refrain from a second consecutive interest rate cut this week.

Minister Cohen emphasized the need for stimulus measures to buoy the economy during these challenging times. Proposals to alleviate inflationary strains include revisiting excise tax reductions on fuel, electricity, and water. However, as of now, no imminent changes to the existing policy have been anticipated.

The specter of escalating fuel prices continues to cast a shadow over the Israeli economy, with policymakers scrambling to find solutions to mitigate its impact on inflation and economic stability.