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The Israeli economy is currently undergoing a transition, and uncertainty reigns. At the end of July Israel will have been operating for 19 months based on the 2008 state budget, and then will start 17 months based on the two-year 2009-2010 budget, an Israeli invention of Benjamin Netanyahu's creation and unknown elsewhere in both the developed and third world.

The March consumer price index was published on Tuesday, a 0.5% increase, and economists now have another bit of uncertainty to chew on. All the forecasts were in the 0% to 0.2% range, with the real extremists predicting a 0.3% rise. Everyone was wrong.

The immediate question was whether this is a one-time digression, based on seasonal and other one-off occurrences, or whether this was a sign of increasing consumption and the harbinger of the start of an economic recovery - what is called "positive inflation" in the sense of good inflation. This is especially important as forecasts are for 0.7% to 1% inflation in April.

We should not draw any conclusions from a single month's CPI, which could be based on random or chance circumstances. It is better to wait and base such an analysis on a number of months, and we will have to carefully study the components of the index over the next few months. Our new Finance Minister, Yuval Steinitz, should also heed this suggestion.

But another cause of the high CPI could be that the Bank of Israel is printing money to finance its $100 million in daily foreign currency purchases, as well as its purchase of government bonds.

This is in direct contradiction to the central bank's claims that it is sterilizing these purchases with various methods such as issuing short-term notes and other steps.