Published On: Thu, Aug 15th, 2013

No surprises in July inflation reading

The Consumer Prices Index rose by 0.3% last month, in line with the market consensus.

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/ By Hillel Koren /

The Consumer Prices Index (CPI) rose by 0.3% in July, to 102.1 points, the Central Bureau of Statistics announced today. The monthly reading is more or less in line with the market consensus.

There were notable rises in leisure and vacations (8.1%), fresh vegetables (3.1%), fresh fruits (6.6%), housing (1%), culture and entertainment (0.9%), transport (0.5%), and food (0.4%). On the other hand, clothing and footwear prices dropped 8%, and prices of furniture and home appliances fell 0.5%.
The hike in taxation on alcoholic drinks that came into force last month led to a 10% rise in this item.

The CPI excluding housing rose by just 0.1% last month. Since the beginning of 2013 the CPI has risen by 1.6%, and in the twelve months to July it rose 2.2%.
Economists and analysts agree that, apart from the housing item, which continues to be worrying, the various components of the index do not indicate excess demand, and no inflationary pressure is in sight. Accordingly, the Bank of Israel is likely to cut its key lending rate by a further 0.25 points in its forthcoming interest rate decision for September. Nevertheless, the possibility remains that the central bank may leave rates unchanged because of the continuing rise in housing prices and in mortgage lending.

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