The Expected Rate of Inflation Derived from the Capital Market, Forecasters’ Inflation Forecasts and the Development of the Means of Payment

 
Expected inflation rate (percent)
Means of payment (M1)
Date
Calculated from capital market1
Average3 of the inflation forecasts 12 months forward
Average monthly balance (NIS billion)
Rate of change (percent)
For the first year
(See note 2)
For two years
For five years
For tenth year (forward)
 
Monthly
Previous 12 months4
Annual data5:
 
 
 
 
 
 
 
 
2008
2.0
2.0
2.3
2.4
2.5
72.1
4.0
17.5
2009
1.6
1.9
2.5
1.8
1.8
109.6
0.5-
52.1
2010
2.6
2.7
2.9
2.3
2.7
114.7
2.8
4.6
2011
2.5
2.6
2.8
2.4
2.8
116.5
2.2
1.6
2012
2.1
2.4
2.6
2.3
2.3
126.6
2.1
8.7
2013
1.7
2.0
2.3
2.3
1.8
145.8
2.3
15.2
Monthly data6:
 
 
 
 
 
 
 
 
2013
 
 
 
 
 
 
 
 
January
1.7
2.2
2.4
2.9
1.9
126.7
0.1
10.6
February
1.8
2.1
2.4
2.4
1.9
128.2
1.2
12.2
March
2.0
2.2
2.4
2.3
1.9
131.2
2.3
15.2
April
1.7
2.0
2.4
2.0
1.8
131.4
0.1
8.8
May
1.7
2.0
2.3
2.1
1.8
132.2
0.6
10.9
June
1.5
2.0
2.2
2.3
2.0
134.9
2.1
11.6
July
1.5
2.0
2.2
2.3
1.9
138.9
2.9
13.8
August
1.7
2.1
2.3
2.3
1.8
141.1
1.6
12.7
September
1.7
2.1
2.3
2.3
1.9
144.6
2.5
13.5
October
1.5
2.0
2.2
2.1
1.8
143.0
1.2-
13.6
November
1.3
1.8
2.2
2.3
1.7
142.5
0.3-
15.0
December
1.7
2.0
2.2
2.3
1.7
145.8
2.3
15.2
2014
 
 
 
 
 
 
 
 
January
1.7
2.0
2.2
2.3
1.7
146.5
0.4
15.6
February
1.7
1.9
2.2
2.3
1.6
149.5
2.1
16.6
March
1.6
1.9
2.2
2.3
1.6
152.3
1.8
16.0
April
1.6
1.9
2.2
2.3
1.6
157.7
3.6
20.1
May
1.5
1.8
2.0
2.2
1.5
157.6
0.1-
19.2
June
1.4
1.6
1.9
2.4
1.4
159.0
0.9
17.9
July
1.3
1.5
1.9
2.5
1.3
165.2
3.9
19.0
August
1.1
1.3
1.7
2.4
1.2
171.8
4.0
21.8
September7
1.1
1.3
1.6
2.2
1.1
180.1
4.8
24.5
October 7
0.6
1.0
1.5
2.0
1.0
186.4
3.5
30.4
November 7
0.4
0.7
1.3
2.1
0.8
189.2
1.5
32.8
Current data8
0.5
0.8
1.4
2.2
0.6
 
 
 
 
1 Inflation expectations derived from the capital market are defined as the ratio between the yields on unindexed government bonds and the yields on CPI-indexed government bonds (breakeven inflation). They include an inflation-risk premium component and various biases deriving from the differences in taxation and liquidity between different types of bonds. For an explanation of how the expectations are calculated click on the following link:
   The data published are based on a revised model for estimating the real yield curve (revised back to 2008).

   This model accounts for the seasonal factors of the CPI by taking the real yields of bond series with various terms to maturity and deriving from them the yields for complete years. For details, click on the following link:  

For old series published thus far:
2  Between August 2014 and August 2015, there is no CPI-indexed government bond series with a term to maturity of close to one year, so it is likely that there will be some bias in estimating the short term region of the real zero-coupon yield curve, which impacts the estimation of 1-year inflation expectations. During this period, the 2-year expectation is the best estimate for short term expectations obtained from the capital market.
3  The simple arithmetic mean of the inflation forecasts of commercial banks and economic advisory companies that publish their forecasts on a regular basis.
4  The average level in the current month compared with the average level in the equivalent month in the previous year.
5  Annual data: expected rate of inflation—annual average; means of payment (M1)—average in December.
6  Monthly data: monthly average.
7  Money supply data are preliminary data.
8  Expectations derived from the capital market—average for the CPI month (from the 16th of the previous month until the 15th of the current month); forecasts—the average of forecasts which were revised after the CPI was published.