CPI up 0.3% in December

Israel’s Consumer Price Index rose by 0.3% in December 2022, the Central Bureau of Statistics announced this evening. Analysts expected a rise of 0.3-0.4%. Unlike in the US and Europe, in Israel inflation is not moderating, and the annual rate continues to be 5.3%, for the second month in succession. This is Israel’s highest rate of inflation for twenty years.

There were notable rises in December in transport (1.1%), housing and medical services (0.6% each), and home maintenance (0.2%). Prices of fresh produce fell 2.8%, the culture and entertainment item fell 1.4%, clothing and footwear fell 1%, and furniture and home equipment fell 0.7%.

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The residential rentals item rose 0.4%. Tenants who renewed leases saw a 4.4% rise in rent, and for new tenancies the rise was 8.2%.

Changes in home prices are published at the same time as the CPI but are not included in it. In October-November 2022 prices rose 0.3% in comparison with September-October, and were up 18.8% in comparison with October-November 2021, which is the lowest annual rise since February 2021.

On measures by the government to ameliorate the effects of price rises, Ofer Klein, head of the Economics and Research Department at Harel Insurance and Finance wrote last week, “The government’s declarations of its intention of helping to bring prices down are legitimate, but in our view if this is done mainly by raising the government deficit, it’s a recipe for failure. A consistent rise in the deficit is liable to harm Israel’s positive fiscal reputation, and this will manifest itself in depreciation of the shekel, which will mean greater imported inflation, and render the government’s measures to bring down prices useless. In addition, if such a dynamic develops, it will oblige the Bank of Israel to maintain a higher interest rate for longer in order to moderate the pressure for currency depreciation.”

Published by Globes, Israel business news – en.globes.co.il – on January 15, 2023.

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