April Rise in CPI Is Smallest Since 2003

Economists confounded by modest increase in consumer spending.

Moti Bassok
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Shoppers at a supermarket. Credit: Ilan Asayag
Moti Bassok

The consumer price index rose just 0.1% in April compared to March, the Central Bureau of Statistics reported on Thursday.

The figure confounded analysts’ expectations, who were predicting a jump of about 0.6%. Prices normally rise relatively steeply in April due to demand created by the Passover holiday, which usually falls during that month. This year the holiday began on the evening of April 14.

The April 2014 price increase was the smallest since 2003. Food prices dropped in April by 0.3% and Passover matza this year was 5.9% less expensive than last year. Over the past 12 months, the price index has risen by just 1%, the low point of the 1% to 3% target range set by the government. As a result of the modest rise in the April consumer price index, the Bank of Israel is expected to leave its base interest rate at 0.75% for June.

The relative stability in the cost of consumer goods reflects what has been generally felt for several months and that is that is that consumer demand has been lax. On the other hand, government tax collection is up this year — a sign of a healthy economy.