Capital market analysts agree that the Consumer Price Index (CPI) will show a rise in May, but they disagree about how much. Some analysts predict a rise of 0.5%, while others predict a rise of just 0.1%. The Central Bureau of Statistics will publish the CPI for May tomorrow.
Like the past three years, the range in forecasts has been attributed to the volatile housing item in the CPI. At 21%, it is the weightiest item in the index. Therefore, any small change in this item affects the CPI as a whole. In March, the housing item began to climb again, after falling for several months.
Another contributing factor for the range in forecasts is the effect of the introduction of summer fruits as a component in the CPI. Analysts expect the fresh fruits item to rise by at least 2%.
Despite the disagreements over the rise in the CPI, there is consensus concerning the interest rate. Even if the rise in the CPI in May is at the upper end of the forecasts, the analysts believe that Governor of the Bank of Israel Prof. Stanley Fischer will keep the interest rate for July unchanged at 1.5%, because of the great uncertainty in the global economy.
Published by Globes [online], Israel business news - www.globes-online.com - on June 14, 2010
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