The Consumer Price Index (CPI) for October fell 0.7%, beating all forecasts. The CPI fell 0.9% in September. The reasons for the plunge were the ongoing shekel appreciation against the dollar and the euro and the fall in energy prices. This is the lowest CPI for October since the days of the British Mandate, which ended in 1948.
The CPI now stands at 103.1 points. Inflation in January-October was just 0.1%, and was minus 0.2% over the past 12 months.
The negative CPIs and low inflation in recent months, well below the 1% lower limit of the price stability target, will undoubtedly cause Governor of the Bank of Israel Prof. Stanley Fischer to cut the interest rate by another 0.25% at the end of the month, to 5%.
The components of the CPI that fell the most in October were transport and communications -1.9%; housing -1.8%; and household maintenance -1%. These drops were offset by a 3.6% rise in clothing and footwear, and a 2.5% rise in fruits and vegetables.
Kerosene and diesel for heating fell 15%, and fuel and oils for vehicles fell 8%.
Published by Globes [online], Israel business news - www.globes.co.il - on November 15, 2006
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