ABSTRACT
Disinflation in Israel has been slow and gradual. After inflation reached a peak of 445% in 1984 and following a comprehensive stabilisation programme in July 1985, there have been three major phases. In the first phase, from 1986 to 1991, the rate of inflation stayed in the range of 16%-20%, with an average of about 18% per year. This was followed by a second phase, from 1992 to 1996, in which the average rate of inflation was reduced to about 10% per year. It is evident that Israel has witnessed the emergence of a new (third) phase starting in 1997. The rate of inflation for 1997 declined to 7% and, aside from the last third of 1998, in which inflation was temporarily sent off track by global financial instability, the rate of inflation continued to fall, reaching about 2.5% in 1999. The official inflation target for the years 2000 and 2001 has been set as the range 3%-4% per year.
