High CPI Shows Inflation Is Back

Inflation is back: Prices increased in April by 0.9%, slightly more than analysts predicted, according to figures issued Friday by the Central Bureau of Statistics.

An increase was expected - analysts surveyed by Bloomberg said the consumer price index would be up 0.6% to 0.7% for the month, due to the Passover holiday. But the 0.9% increase shows that Israel is facing high inflation, as the Bank of Israel had predicted.

However, Bank of Israel Governor Stanley Fischer still isn't expected to raise interest rates at the end of the month. While higher interest tends to suppress inflation, Israel could be facing export shocks due to the financial crisis raging in Europe, and one way to help exporters is by keeping interest rates low.

Prices generally increase in April, as spring begins and the country celebrates Passover. Last month's price increases made up for the negative inflation in the first quarter of the year, which means inflation for the year has been 0% so far.

Pulling the CPI higher were clothing and footwear, which became 11.4% more expensive. Alcohol prices jumped 8.6%, due to new taxation methods. The price of fresh fruit rose 3.4% in April.