CPI down 0.1% in February


The fall is less than analysts expected. Housing prices rose 4% in the year to January.

Israel's Consumer Price Index (CPI) fell 0.1% in February, the Central Bureau of Statistics reported this evening. Analysts had expected a fall of 0.2-0.3%. In January, the CPI fell 0.4%. The annual rate of inflation is currently 0.1%.

In February, there were notable falls in prices of clothing and footwear (3.8%) and communications (1.1%). Fresh produce prices rose 4.6%.

The February CPI reading does not reflect the impact of the coronavirus outbreak and the drop in the price of oil. In the past few days, because of these events, inflation expectations as derived from the capital market have fallen, and the market now expects negative inflation in 2020 and in 2021. In the view of Mizrahi Tefahot Bank chief strategist Modi Shafrir, the market's expectations have fallen too low.

Housing prices (which do not form part of the CPI) have continued to rise. In comparison with transaction prices in the period November-December 2019, prices in December 2019 to January 2020 were 0.8% higher, and they were 4% higher than in the corresponding period twelve months earlier (December 2018-January 2019).

In the comparison between December-January and November-December, prices rose in all districts: by 1.6% in Jerusalem; 1.1% in the south, 0.8% in the central district; 0.6% in Tel Aviv; and 0.3% in Haifa.

In the year-on-year comparison (December 2019-January 2020 versus December 2018-January 2019) prices also rose in all districts, the steepest rises being in Tel Avi - 6%; northern district - 5.6%; and Jerusalem - 3.7%.

Prices of new homes rose by 1.1% between November-December and December-January, but were down 1.6% in comparison with December 2018-January 2019. In December-January, 40.6% of transactions in new homes were with government support, which compares with 43.6% in November-December.

Published by Globes, Israel business news - en.globes.co.il - on March 15, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

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