During January 2012 the Israeli CPI continued its inertia as it remained unchanged again for the second consecutive month.
In the recent Central Bureau of Statistics report regarding consumer prices changes for January 2012, the Israeli inflation (CPI) remained flat compared with December’s CPI (see chart below). The CPI sans energy and the index sans housing decreased each by 0.1% during January, while the CPI sans fruit and vegetables also remained flat.
The main sectors that pushed the inflation rate up during January were: fresh fruit (1.5% increases), transportation (0.6% increases), food (0.5% gain). On the other hand, the following sectors’ prices decreased during last month and curbed gains in the general CPI: footwear and clothing (7.7% drop) and fresh vegetables (6.2% decreases). During recent months some of the price gains were imported such as the increases in food prices and energy prices.
During the last twelve months (January 2011to January 2011) the Israeli inflation rose by 2.0%; the CPI without fruit and vegetables increased by 2.3%; the CPI without energy rose by 1.6%; and the CPI without housing rose by 0.9%.
The Bank of Israel reduced the February basic interest rate by 0.25 percent points from 2.75% to 2.5% – the lowest interest rate since March 2011. This is another attempt by the Bank to keep the economy growing and closing some of the gap between the interest rates in Europe & U.S. and Israel.
Bank of Israel is likely to continue examining the Israeli inflation, and even more importantly the economic situation in Europe which could adversely affect Israel’s progress. This means there is a good chance in the near future we will see additional rate reductions by BOI.
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