Israel CPI gains further to breach target, hits 3.2% annual rate in July

JERUSALEM (Reuters) - Israel's inflation rate kept climbing in July, data from the Central Bureau of Statistics showed on Thursday, reducing the likelihood of further interest rate reductions anytime soon.

The annual inflation rate rose to 3.2% last month, above expectations of 3.1% in a Reuters poll and up from 2.9% in June to exceed the government's 1-3% annual target range.

The consumer price index rose by a slightly higher than expected 0.6% in July from June, bolstered by higher costs of fresh produce, food, housing, transport and entertainment. These were partly offset by declines in clothing and footwear and furniture.

After cutting its benchmark interest rate in January, the Bank of Israel left the rate unchanged at subsequent meetings in February, April, May and July, citing geopolitical tensions, rising price pressures and looser fiscal policy due to Israel's war with the Palestinian militant group Hamas.

It next decides on rates on Aug. 28.

(Reporting by Steven Scheer; Editing by Hugh Lawson)