Against all expectations, Israel's Consumer Price Index (CPI) fell by 0.3% in July, the Central Bureau of Statistics reported this evening. Market expectations had been for a rise of 0.2-0.3%. Six of the ten major items in the CPI fell. The CPI's movement is one of the most important factors influencing the Bank of Israel's interest rate decision at the end of the month.

The fall in seasonal products that most affected the CPI in July was clothing and footwear, which fell by more than 8%. Fresh fruit and vegetables fell by 0.6%.

In the public products sector, (prices over which the government has an influence) - fuel fell by 3% and water fell by 4.7%. Dairy products, a target of the cottage cheese protests, fell by 2%.

Apartment maintenance prices fell by 0.7%, and food fell 0.6%.

On the other hand, the housing category rose by 0.4%.

Inflation over the past 12 months is now 3.4%, and is moving closer towards the upper limit of the government's target. Inflation in the first seven months of 2011 stands at 1.9%.

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

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