Tomato Price Dropped 11% in February, Dragging Down CPI

The consumer price index decreased by 0.3% in February, in line with the consensus among economists, for once. The month before, the index, which tracks a basket of goods and services, had fallen by an unexpectedly steep 0.7%, confounding analysts who had expected a drop half that large.

The most striking price decreases in February were of clothing and footwear, which fell by 6.3% compared with the month before. Other decreases were minor: Prices of fresh fruit and vegetables eased by 1%.

One exception to the general flatness was yet again the tomato, whose price tumbled nearly 11% month to month. Of the many fresh fruits and vegetables grown in Israel, tomato prices have a habit of fluctuating especially sharply month to month. Among the prices that increased was that of foreign travel, which rose by 1% in February.

Following the February result, analysts largely agree that Bank of Israel governor Stanley Fischer is likely to leave overnight lending rates for April unchanged at 1.25%. Many say, however, that for May, the central bank is likely to start raising interest rates again.

Tweaking interest rates is the central bank's way of controlling inflation, which it is supposed to keep between 1% and 3% - defined as price stability. It has missed that range for the last three years. At present, most analysts say the central bank can regain the target range in the third or fourth quarters of this year.