After continuous negative Consumer Price Indices (CPI) since September 2003, the February CPI, to be published tomorrow, is expected to be positive. Economic ministries in Jerusalem nevertheless predict that the February CPI will be very low, no more than 0.1%, within the range of statistical error. Most forecasters' predictions for the CPI have been wrong during the past two years.
Most bank and investment houses' forecasters predict that the February CPI will be around zero. Union Bank of Israel, The First International Bank of Israel, Clal Finance Batoucha, and Salomon Capital Markets predict that the CPI will rise by a maximum of 0.2% in February. In contrast, Israel Discount Bank, Netivey Gemel, and Menorah Gaon Investments predict that the CPI will fall by 0.1%. Bank Hapoalim, Excellence-Nessuah, Harel Capital Markets, and the Ministry of Finance predict that the CPI will rise by 0.1% in February.
Most forecasters predict that the CPI will fall in March thanks to the cuts in VAT and purchase taxes in mid-February. The CPI for the first quarter of 2004 is therefore predicted to fall 0.5%. The tax cut is expected to reduce the CPI for 2004 as a whole by 0.4-0.6%.
The CPI has been negative eight times since April 2003. Deflation in 2003 amounted to 1.9%.
Published by Globes [online] - www.globes.co.il - on March 14, 2004