The Consumer Price Index (CPI) rose 1.1% in July 2007. Excluding fruits and vegetables and housing, the CPI rose by 0.5%, the Central Bureau of Statistics reported yesterday.
Inflation in January-July was 2.1%. The CPI excluding fruits and vegetables rose by 2.3% and the CPI excluding housing rose by 1.9%. Trend figures for April-July indicate that inflation on an annualized basis is 3.1%, which is above the ceiling of the Bank of Israel’s 1-3% inflation target. The shekel’s depreciation against the dollar during July contributed about 0.8% to the CPI rise. Other contributors were prices rises for bread, electricity, fuel, and books.
The domestic and foreign recreation item in the CPI rose by 5.3% because of the shekel’s depreciation against the dollar and euro. The housing item rose by 4.3%, apartment rent by 2.2%, fuel and oil by 1.8%, bread by 1%. Bread prices will probably also contribute to a rise in the August CPI.
CPI items that declined in July, ameliorating the rise, included a 4% seasonal drop in prices for both fresh fruit and shoes, a 3.5% drop in clothing prices and a 2% drop in prices for poultry. Were it not for these items, the July CPI would have risen by 1.5%.
In the wake of the 1.1% rise in the CPI in July and the 0.7% rise in June, Governor of the Bank of Israel Prof. Stanley Fischer has little maneuvering room in deciding the interest rate for September. The decision will be made on August 27. Sources predict that he will raise the interest rate by 25 basis points to 4%.
Published by Globes [online], Israel business news - www.globes.co.il - on August 16, 2007
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