Israeli Consumer Prices Unexpectedly Fell in August

The drop in global oil prices added to lower apparel and fresh-produce prices at home, as the CPI dipped 0.3%

The Oil Refineries site in Haifa.
Rami Shllush

Israel’s consumer price index unexpectedly fell in August – by 0.3% – ending a four-month string of rises, the Central Bureau of Statistic said Thursday.

Economists had expected the CPI to show no change as Israel struggles to exit from deflation. But a 14% tumble in global oil prices lowered the price of fuel. Meanwhile, apparel prices dropped 4.9%, fresh-produce prices fell between 2.5% and 3.3%, and transportation/communications prices eased 1.3%. Inflation was just 0.1% in the first eight months of the year.

“The decline in the August index strengthens the view that Israel is about to marks its third straight year of negative inflation,” said Idan Azoulay, CEO of Epsilon Mutual Funds. “Structural changes in the economy will continue to support a low-inflation environment and mean that interest rates will remain low.”

The statistics bureau’s housing price index, which is not included in the overall CPI, showed a 0.1% rise for August, while the figure for July was revised to show a drop of just 0.1%, not 0.3% as originally estimated. In the 12 months through August, home prices were up 6%.