Israel's Consumer Price Index fell by a surprising 0.7% in June, the Central Bureau of Statistics reported today. Forecasters, among them the Bank of Israel, did expect a fall in the index but not such a sharp one. The expectation was for a fall of 0.2%.
In recent months the inflation rate has again turned negative, and figure for the twelve months to June is minus 0.2%. Prices of fresh fruit and produce fell 8.7% last month, clothing and footwear prices fell 5.4% and the home maintenance item fell 1.1%, following a 14.5% cut in the basic price of water.
In a comparison between home prices in April-May 2017 with prices in March-April 2017, the index of home prices rose slightly, by 0.1%. In comparison with the April-May period in 2016, prices rose 4.5%. The Central Bureau of Statistics stresses that these are not final figures, as there are presumed to be transactions in the April-May period this year that have not yet been reported.
In the announcement of its decision to leave its interest rate unchanged this week, the Bank of Israel said on inflation: "The annual inflation rate is slightly below the target, but the inflation environment remains low: inflation expectations for up to the third year remain below the target range. The increase in nominal wages, the strong economic environment, and inflation worldwide will act to increase the inflation rate, while the appreciation that has occurred in the shekel, increased competition in the economy and measures adopted by the government to reduce the cost of living will act in the opposite direction."
Last month, the CPI rose 0.4%, and home price index rose 0.5%.
Published by Globes [online], Israel business news - www.globes-online.com - on July 14, 2017
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