Israeli consumer prices edged up 0.1% in September, the Central Bureau of Statistics said on Sunday – a small increase on August, but far from economists’ expectations for an 0.3% decline.
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The small rise brought inflation over the last 12 months to 0.1%. But even that small increase was mainly due to housing prices, which rose 0.2% over July and August, and were up 4.7% over the last few months. Without housing prices, the overall consumer price index would have been down 0.1% for September and 0.5% since the start of the year.
“The inflationary environment remains very low – without energy and fresh produce it fell 0.2% over the last 12 months, due to the shekel’s appreciation and increased competition in business,” said Jonathan Katz, an economist at Leader Capital Markets.
Ofer Klein, chief economist at Harel Insurance & Finance, said that despite the surprise increase in the consumer price index, the backdrop of persistent low inflation meant the Bank of Israel would not raise its base lending rate this Thursday and would probably lower its forecast for an eventual hike by the end of 2018 to 0.25%, from the previous 0.5%.
Katz said he didn’t see an increase on the current rate, which is 0.1%, before inflation reached the government’s target of 1 to 3% annually, which he forecast would not come until the middle of 2019.