The Consumer Prices Index (CPI) fell 0.7% in January, the Central Bureau of Statistics reported today. The fall was far larger than the 0.3% that most analysts had predicted.

This is the second successive month that the price of apartments have fallen. Apartment prices fell 1% in January, after a 0.2% drop in December. The fall in apartment prices was responsible for 0.2% of the drop in January's CPI.

Another major influence on the January CPI was the 10% fall in clothing prices in January, which contributed a drop of 0.25% to the overall index.

Despite the rise in water tariffs water prices went down 10% in January because of the freezing of the drought tax. The price of fresh vegetables fell 6% and prices of overseas vacations were down 1.6%.

In contrast fresh fruits rose by 3%, bus travel was up 4.5% and the price of electricity was up 1%.

Annual inflation from January 2009 to January 2010 stands at 3.8%, still above the government target for price stability of 1%-3%.

Analysts do not expect inflationary pressures in the first half of 2010. However, the analysts' consensus was that prices would fall by only 0.3% in January. The most aggressive, and in the event correct prediction came from Excellence Nessuah chief economist Shlomo Maoz who predicted a 0.6% fall in the January CPI.

Published by Globes [online], Israel business news - www.globes-online.com - on February 15, 2010

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