April CPI Shocks With 1.5% Increase

Consumer prices in April shocked economists by rising far more than forecast, just as they had in March. Inflation last month came in at 1.5 percent, the highest rate for April in six years, according to figures released yesterday evening by the Central Bureau of Statistics.

The governor of the Bank of Israel, Stanley Fischer, is thus expected to raise interest rates by 0.25 percent later this month, or even 0.5 percent, from the current level of 3.25 percent.

Over the past 12 months, inflation has surged well beyond the target range of between 1 percent and 3 percent set by the Bank of Israel and cabinet.

The consumer price index has risen by 4.7 percent over the last 12 months.

As high inflation is forecast for both May and June, it appears Fischer will once again miss his annual inflation target, as he has for the past two years.

Most CPI categories showed significantly higher prices in April, with the biggest jump coming in clothing and shoes, which were 6.7 percent more expensive.

Higher global oil and food prices, which have been climbing amid strong economic growth in India and China, are a key factor for the recent inflation wave.