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Economists were surprised as August inflation hit 0.5%, higher than the 0.3% rise analysts forecast.

But the good news was that the recent cost-of-food protests seem to have had an effect, as food prices declined last month by 0.2%, figures released yesterday evening by the Central Bureau of Statistics showed.

Inflation is running at 3.4% over the past 12 months, which is above the Bank of Israel and the government's target inflation range of 1% to 3%. Consumer prices have risen 2.4% since the beginning of 2011. But inflation has slowed down since the start of the year, at least until August, and inflation was only 0.6% annualized for the period from May through August.

What did pull the consumer price index up were housing prices, up 1.3%; and transportation costs, which rose 0.8%. The cost of fresh fruit also jumped, rising 3.4% in August.

These increases were partly offset by drops in clothing and shoe prices, down 5.7%; communications, down 0.5%; and food.

Household electricity prices rose 5% in August and the price of cheese rose 1.9%.

The high August CPI came after an especially low one in July, a negative 0.3%, which was also affected by a slowdown in sales due to the social protests all over the country.

Investors, as well as consumers, are mostly interested in what Stanley Fischer, the governor of the Bank of Israel, will decide to do with October interest rates. Most analysts believe Fischer will leave October interest rates unchanged at 3.25%.