The Consumer Price Index (CPI) is expected to fall by 0.3% in March, bringing inflation for the first quarter of 2008 to minus 0.5%, predict the Bank of Israel, Ministry of Finance, and Bank Hapoalim. There is no uniformity in predictions among the forecasters, and the range of predicts is quite wide.
Harel Insurance Investments and Financial Services Ltd. (TASE: HARL) predicts no change in the March CPI, for example, while other investment houses predict that the CPI will fall by up to 0.3%.
The factors affecting the March CPI include the 3.7% shekel appreciation during the month, a 1.8% drop in prices for housing and in electricity rates, as well as seasonal drops in prices for clothing and footwear, and fruits and vegetables. The March CPI has fallen in five of the past ten years, with a drop ranging from 0.1% to 0.3%.
The March CPI is likely to be the last drop in many months: the CPI is expected to rise by a cumulative 0.8-1.3% in April-May.
Inflation in April 2007-March 2008 is predicted to exceed the 3% inflation target ceiling, but inflation for the 12 months through February 2009 is expected to be 2.2%. Inflation in 2008 is projected at 2.5%, in the upper end of the 1-3% inflation target range. It is therefore probable that Governor of the Bank of Israel Prof. Stanley Fischer will leave the interest rate for May unchanged at 3.25% after cutting the rate by one percentage point in the past two months.
Published by Globes [online], Israel business news - www.globes-online.com - on April 14, 2008
© Copyright of Globes Publisher Itonut (1983) Ltd. 2008