April CPI reading much higher than expected

With inflation failing to moderate, the likelihood that the Bank of Israel will hike the interest rate again next week has increased. Housing prices remain unchanged.

Inflation in Israel is not easing: the country's Consumer Price Index (CPI) rose by 0.8% in April 2023, the Central Bureau of Statistics announced this evenig. Analysts had predicted a rise of only between 0.4% and 0.5%, which would have seen annual inflation fall to 4.6-4.7% but instead, in the past 12 months the CPI has risen by 5%, unchanged from last month.

There were notable price rises in April in fresh fruit and vegetables (4%), transport (2.5%), clothing and footwear (1.9%), culture and entertainment (1.8%), and housing costs (0.5%), and food (0.4%).

There were notable price falls last month in household maintenance products (0.5%) and furniture and household equipment (0.2%).

Changes in home prices are published at the same time as the CPI but are not included in it. In February-March 2023 housing prices were unchanged in comparison with January-February 2023, and have risen 11% in comparison with February-March 2022.

The higher than expected CPI reading will affect next week's Bank of Israel interest rate decision. Even before the April CPI was reported analysts predicted a 70% likelihood of the Bank of Israel hiking the rate at its next meeting in its efforts to curb inflation.

Published by Globes, Israel business news - en.globes.co.il - on May 15, 2023.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.

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