The Consumer Price Index (CPI) was unchanged in May, the Central Bureau of Statistics reported this afternoon. This was a major surprise with most analysts predicting a rise of 0.3-0.4%. Inflation over the past 12 months was 1.6%, and since the beginning of the year the CPI has risen by 1.3%. Trend figures indicate a current rate of inflation of 2.3%, within the government target range of 1-3%.
In May, housing costs (not including the price of buying an apartment) rose by 0.3%. The price of tomatoes rose by 28% and fresh fruit by 9.6%, while beverages rose by 1%.
Prices that were down included gasoline, which fell 1.7%, dairy products, which fell 1.8%, and furniture which fell 1.5%. The price of bread fell 1.5%, chicken fell 2.5%, and for the second successive month cucumber prices plunged, falling 29.4% in May.
The unexpectedly low CPI gives the Bank of Israel room to maneuver should it want to lower the interest rate. At the same time, the expected fall in exports and lower demand strengthens the belief that inflation will remain low in the coming months.
Published by Globes [online], Israel business news - www.globes-online.com - on June 15, 2012
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