The Israeli Ministry of Finance reported today, Monday, that "the attacks by the Iranian-backed Houthi movement in Yemen on shipping vessels in the Red Sea have a limited impact on trade in Israel and have not resulted in any significant inflationary pressures." The Ministry of Finance stated: "With global shipping costs rising by 163%, Israel may be affected by increased import costs, supply chain disruptions, and higher commodity and energy prices." However, it clarified that "the cost of shipping does not exceed three percent of the total value of imports. Since imports account for only 20 percent of private spending, the cost of shipping on private expenditure does not exceed 0.6 percent."
The ministry noted that "in the worst-case scenario, the surge in shipping costs could lead to an increase of up to one percentage point in the consumer price index next year." The ministry added that "there have been no significant disruptions in the supply chain, and commodity and energy prices are largely stable." As a result, the ministry announced "that the inflation expectations for next year remain unchanged." Inflation has reached its lowest level in more than two years at 2.6 percent.
Israel's imports amounted to $108 billion in 2022. The ministry indicated that goods worth $73 billion out of total imports came by sea, with 32 percent from Asia. Exports in 2022 were approximately $73 billion, of which $26 billion was by sea, and about 16 percent to Asia. The Houthis have been carrying out repeated drone and missile attacks on international commercial shipping in the Gulf of Aden since mid-November, stating that they are doing so in solidarity with the Palestinians in response to Israeli military operations in the Gaza Strip.
Their attacks in the Red Sea have disrupted global shipping, forcing companies to reroute and embark on longer, more costly journeys around South Africa, and raising fears of the escalation of conflict between Israel and the Palestinian Islamic Resistance Movement (Hamas), which could destabilize the Middle East.
