JERUSALEM: Israel’s annual inflation rate rose for the first time in four months in September, led by higher prices of housing and fresh produce, data from the Central Bureau of Statistics showed. The consumer price index showed prices gained 0.1 percent from a year earlier versus a 0.1 percent drop in August. Analysts polled by Reuters had predicted a 0.3 percent slip.
Israeli prices began falling in September 2014 and kept doing so for 28 months in a row before turning positive in January for five months, with the inflation rate hitting 0.9 percent in March. Compared with the previous month, consumer prices rose 0.1 percent in September. Prices of housing rentals, fruits and vegetables, furniture, fuel and healthcare rose last month, while the costs of education, culture and entertainment, transportation and communications and clothing and footwear declined, the bureau said on Sunday. Expectations that inflation would stay below the government’s 1-3 percent target in the near term drove the Bank of Israel to cut benchmark interest rates in early 2015 to 0.1 percent from 0.25 percent. The bank, which has held the rate steady since then, projects an inflation rate of 0.5 percent in 2017, rising to 1.5 percent in 2018. It expects a strong shekel, increased competition in the economy and government measures to cut the cost of living to offset higher wages, a strong economy and global inflation. The bank’s next rate decision is scheduled for Oct. 19.
Bank of Israel economists believe the benchmark interest rate will remain at 0.1 percent through the first quarter of 2018, then rise to 0.25 percent in the second quarter, and end the year at 0.5 percent. Central bank chief Karnit Flug has said rates likely will not rise until inflation is back to within its target range.
