What will be the rate of change in the Consumer Price Index (CPI) in September 2010, which the Central Bureau of Statistics will announce on Friday? Capital market forecasts vary widely, ranging from zero, to a rise of 0.5%. The lack of consensus is rare.
Quite a few analysts predict that the CPI will rise by 0.2-0.3% in September. The bone of contention between the analysts is over fresh produce. There was increased demand during September's Jewish holidays. There is even more disagreement about how the heat wave affected crops during the month. Fresh produce accounts for 4% of the CPI, and the deviation in the analysts' forecasts amounts to 10%.
The CPI normally drops in September, due to seasonal factors. However, this year, the Jewish holiday season began in early September, and therefore expected to boost the CPI. The holidays also boosted prices for fresh meat. Analysts also expect housing item (essentially apartment rental contracts), which accounts for 21% of the CPI, to rise. In addition, taxi fares were raised by 5% at the end of September.
The change in the housing item will greatly affect how the CPI will affect interest rate hikes by the Bank of Israel.
Published by Globes [online], Israel business news - www.globes-online.com - on October 13, 2010
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