Israel’s inflation-linked bonds are showing expectations for consumer price increases near a two-year peak, and the highest among major peers relative to actual price growth. Investors are betting that rising wages, the lowest unemployment rate since at least 2012 and growing private consumption will combine with record-low interest rates to raise retail prices. Still, these factors haven’t stalled 20 months of negative inflation and the bonds may be poised to reverse, according to Alex Zabezhinsky, chief economist at Meitav DS Investment House Ltd. in Bnei Brak, Israel.

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