Consumer Price Index Static in February

Oren Freund
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Oren Freund

Overall consumer prices remained unchanged in February, the Central Bureau of Statistics announced Friday. As analysts had predicted, the consumer price index for February came in at its January level of 100.3 points.

Among those price categories that showed notable increases, however, were the following: fresh fruit, 7.6%; a general category for food, 1.1%; furniture, 1.1%; transportation, 0.7%; and medical services, 0.5%. Notable declines occurred in clothing and shoes, -5.9%; fresh vegetables, -2.3%; communication services, -1.8%; and housing, -0.4%.

If fruits and vegetables are excluded from the calculations, the cost of living actually declined by 0.1% in February, and by 1.5% over the preceding year. Since the beginning of 2013, the overall consumer price index declined by 0.2%.

It is unclear what the Bank of Israel’s monetary committee will decide to do with the base interest rate for April. It currently stands at 1.75%. Most analysts think inflation will be around the middle of the government’s target range of 1% to 3% for the year as a whole, probably coming in at between 1.7% to 2%. For the first time in the bank’s history, the April rate will also carry over to May.

Many analysts say that the central bank will leave the base rate unchanged next month rather than lowering it, due to a number of factors including concern that lower interest rates would spur housing demand and in turn increase housing prices, but particularly because the bank committee has been waiting to see the formation of a new government, which is expected this week.

At the end of last month, by a vote of 5-1, the monetary committee voted against lowering the base rate to 1.5%.

A Tel Aviv fruit and vegetable stand: Marginal behavior. Credit: Uriel Sinai

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