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The CPI has confounded forecasters more than once this year, climbing higher, at times much higher, than forecasts. But the index for September reflects a change in the trend.

For the first time the CPI rose much less than early estimates of 0.4%. The change is no fluke. Inflation worldwide, and in Israel, is slowing down. The U.S. CPI fell by 0.4% last month. Inflation in Israel and throughout the world is set to drop over the coming year because of the sharp fall in energy and food prices on one hand and the reduction in household wealth caused by the global financial crisis on the other hand. Over the past the past twelve months Israel has seen very high inflation - 5.5%, far exceeding the target of 1.0%-3.0%. Food prices have spiraled upward by 12.6%, and home maintenance costs climbed by 10.1%. With the low index in September, and low or even negative indexes expected in the coming months, the CPI for the coming 12 months is expected to be very low, less than 2%.

Stanley Fischer surprised everyone last week when he cut interest rates by 0.5% in an unscheduled move. The new figures will enable him to cut them again this month by another 0.5%.