The Consumer Price Index (CPI) rose 0.3% in February 2011, the Central Bureau of Statistics reported today, compared with analysts' expectations of a rise of only 0.1%. Inflation for the past 12 months is 4.2%, well above the government's 1-3% price stability target.

The exceptionally high rise in the CPI in February can be explained by a 0.4% rise in the housing component (services to homeowners) as well as a sharp 5.7% rise in the price of fresh fruit and vegetables and a 1.2% rise in food overall. Telecom prices also rose 1%.

The pace of inflation will require an additional rise in the interest rate, if not at the end of this month, then at the end of April.

Inflation was offset in February by a 6.3% fall in the price of clothing, a 3.4% fall in the price of vegetables and a 0.8% fall in insurance rates.

This latest data contradicts Minister of Finance Yuval Steinitz's statement on February 28 that, "There is no wave of price rises in the economy."

Published by Globes, Israel business news - www.globes-online.com - on March 15, 2011

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