July 15 (Bloomberg) -- Israel’s inflation rate rose to 3.6 percent in June, the first increase in three months, after the government boosted taxes on gasoline to compensate for a drop in revenue caused by the recession.

Inflation accelerated from 2.8 percent the month before, the Central Bureau of Statistics in Jerusalem said today. The median estimate of nine economists surveyed by Bloomberg was for price-growth of 3 percent. In the month, prices rose 0.9 percent.

“Is this an increase in inflation in the classic sense of demand pushing up prices? Absolutely not,” said Yoel Finkel, associate statistician at the state statistics office. “The rise in the consumer price index in the past few months is due to an increase in global commodity prices, government-induced price increases and seasonal increases.”

Inflation has eased from a peak of 5.5 percent in September and October, enabling the Bank of Israel to lower its benchmark lending rate by 3.75 percentage points to a record low of 0.5 percent. While inflation may accelerate in July and August, due to other government-induced price increases, inflation is likely to slow to 1.5 percent in the next 12 months, said Yaniv Hevron, an economist at Psagot Investment House Ltd.

Inflation Target

The government increased the tax on gasoline by 0.30 shekel per liter on May 21. Its annual inflation target is 1 percent to 3 percent.

Bank of Israel Governor Stanley Fischer will leave the benchmark interest rate unchanged on July 27, according to all eight economists surveyed by Bloomberg. The bank won’t react to “one-time” cost increases brought on by higher taxes unless they cause a second round of price rises, Fischer said in a speech on July 2.

The economy will shrink about 2 percent this year as the global financial crisis undermines demand for exports, the Organization for Economic Cooperation and Development said on June 24. Unemployment is likely to rise to 8.5 percent in 2009, and 9.3 percent in 2010, it said.

To contact the reporter on this story: Alisa Odenheimer in Jerusalem at aodenheimer@bloomberg.net.

Last Updated: July 15, 2009 12:47 EDT