Israel’s Cost-of-living Index Relatively Stable, but Housing Prices Are Climbing

But buyers of residential property faced price rises of 10.5% over past 12 months.

The consumer price index rose 0.2% in March from February, the Central Bureau of Statistics announced Monday. Over the past 12 months the index rose by just 1.3%.

While the March figure showed a distinctly modest increase overall, preliminary figures on the cost of buying a home showed an annual increase of 10.5% when the figures for January and February of this year are compared to January and February of 2012. In recent months the rate of increase of housing costs has also accelerated. Since May-June last year, when this figure declined, the Central Bureau of Statistics has reported an increase in the cost of buying a home for every subsequent reporting period.

According to the statistics bureau the cost of food, excluding fruits and vegetables, went up 4.1% in March. Rents rose by 2.9%. Among other notable increases in components of the Consumer Price Index in March were the cost of culture and entertainment, which rose 1.6%; transportation, which was up 1%; and furniture, which rose 0.4%.

Among categories that showed declines were fruits and vegetables, down 2.9%; communications services, which declined by 1.9%; clothing costs, which dropped 1.5%; home electrical appliances, down 0.7%; and food, excluding fruits and vegetables, which declined by 0.4%.

The Central Bureau of Statistics determined that the expenses of a typical Israeli family under the poverty line declined 0.1% in March from February, while the expenses of the wealthiest 20% rose 0.4% on average. Over the past twelve months the expenses of the poorest 20% of the population increased by 1.7% while those of the top 20% increased 1.2%.

Responding to the expected continued rise in housing prices, analysts at Leader Capital Markets said they don’t expect the Bank of Israel to lower its base interest rate from 1.75%. ‏(Such a move might spur further demand for homes.‏) The central bank’s monetary committee will not be meeting at the end of this month, meaning the current rate will remain in effect at least through May.

David Bachar
Haaretz