Saturday, July 18, 2009

Israeli figures:CPI makes 0.9% leap against predictions

Consumer Price Index published by Central Bureau of Statistics much higher than early assessments, which spoke of 0.3-0.5% rise. CPI up 3.6% in past 12 months

Gil Kol
YNET News,7340,L-3747407,00.html

Surprise: The Consumer Price Index jumped 0.9% in June, following a 0.4% rise in May and an accumulated increase of 1.9% in the previous three months, the Central Bureau of Statistics reported Wednesday.. Early assessments for June spoke of a 0.3-0.5% rise in the CPI. This is the fourth monthly increase in a row despite the recession in the Israeli market.

Footwear and clothing prices made a 12.2% leap in June, transportation and communication prices rose 2.6%, the Cost of Building Index was up 0.1%, and health services were 0.6% more expensive. Fruits and vegetables, on the other hand, became 3.6% cheaper.

Since the beginning of the year, the CPI has risen 2.1%. In the past 12 months (June 2009 compared to June 2008), the CPI rose 3.6%.

The rise in the CPI is not expected to affect Bank of Israel Stanley Fischer's decision as to the interest rate, which is likely to remain 0.5%. The Bank of Israel has signaled that it is focusing on fighting the recession and encouraging productive activity in the economy.

Bank of Israel economists believe that the inflation will not go beyond the target set by the bank – 1-3%. Fischer is expected to wait for positive figures before raising the interest rate, in light of a 3.9% shrinkage in the national product in the first quarter of 2009, the damage caused to the productive activity and the rise in unemployment.

According to estimates presented by economists at different investment banks, the inflation level in 2009 is expected to total about 3%.

Yair Hasson contributed to this report

Comment: We own a small business in Israel, our numbers continue to decline yet we are beginning to see the bottom. Sales have seemingly stabilized and with some disposable income Israelis will begin to visit stores located inside and outside the malls-we are thankful for a recovery soon.

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