Israels Deflationary Trend Ended in 2017

Housing prices have declined, but food prices have gone up

Hundred shekel banknotes.
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Israels Consumer Price Index for December ticked up just 0.1%, the Central Bureau of Statistics reported Monday.

Following a 0.3% rise in November, 2017 closed with an increase of 0.4%, the first time in four years that the index did not end the year in negative territory. Given the low inflation, it seems that the Bank of Israel is far from raising interest rates. The central banks annual inflation target is 1% to 3%.

Clothing prices rose relatively sharply, climbing 4.3% in December, compared to just 0.6% for transportation. Categories pulling the price index down were fresh vegetables, which dropped 6.4%; culture and entertainment costs fell 1.3% and home furnishing prices slid by 1.1%.

The survey also included housing prices, which declined 0.3% in October and November, relative to the September-October period. Despite that decrease, housing prices climbed 2.4% for the year.

For the first time, the Central Bureau of Statistics published data on new homes, the average price of which fell 0.6% during the October-November period.

Overall, new homes sales were down 18% for the first 11 months of 2017 compared to the parallel 2016 period.

For 2017, food prices rose 0.2%, while that of fruits and vegetables dropped 3.8%.