2023-05-16 09:26:30
Consumer prices in Israel rose in April at a rate almost twice as high as expected, the Central Bureau of Statistics (CBS) said on Monday, adding pressure on the Central Bank of Israel to increase to its interest rates once more next week.
The consumer price index (CPI), a measure of inflation that tracks the average cost of household goods, rose 0.8% in April, above analysts’ expectations of 0.4% to 0.5%, bringing annual inflation over the last 12 months to 5%. April’s monthly CPI is the highest since July 2022.
In April, increases were observed in the prices of fresh vegetables and fruits, which increased by 4%, transport increased by 2.5%, prices for clothing and footwear increased by 1.9%, and culture and entertainment prices increased by 1.8%. Prices for trips abroad jumped 8.8%. These increases were offset by declines in housing maintenance costs, which fell 0.5%, and prices for furniture and household equipment, which fell 0.2%, according to CBS.
House prices remained unchanged in April, following falling 0.1% last month. The annual house price growth rate continued to moderate, dropping from 12.8% to around 11%. This following housing prices soared nearly 20% in 2022. Meanwhile, contract renewal rents rose 3.6% in April and contract rents for new tenants climbed 9% .
“In recent weeks, news of price increases in the retail sector has come and gone, led by dairy price increases and reports of dry goods price increases,” Yonnie said. Fanning, chief strategist at Mizrahi Tefahot Bank.
“The high interest rate environment in the local economy, and the fact that we are a small, dense country with a solid population growth rate, creates a somewhat unique situation, in that we are expect them to continue pushing up rental prices in the near future. »
Food maker Strauss said on Monday it would raise prices for some products next month, six months following hikes on a range of other items. Price increases will reach up to 6% for some products, but will average 1.4%. The new pricing will come into effect on June 4.
Carrefour Israel undertakes to sell its products at prices lower than those of its local competitors. (Authorisation)
In early May, it was announced that regulated dairy products would see an increase of more than 9% as part of a planned total increase of 16% over three years. Dairy giant Tnuva has also raised the prices of its unregulated products by an average of 4.65%, with some products expected to increase by more than 9%, mainly due to the increase in the price of raw milk.
The Bank of Israel has steadily raised its key rate from a record high of 0.1% in April 2022 to 4.5% in April this year, in an effort to rein in inflation, which hovers above 5% in annual terms for more than six months, below the target range of 1% to 3% set by the government. The Bank of Israel’s Currency Committee will announce its decision on the next interest rate change on May 22.
Ahead of Monday’s CPI figures and Tuesday’s first-quarter economic growth data, the Israeli market was pricing a 65-70% chance of another interest rate hike next week. , according to Bank Hapoalim.
Following April’s high inflation figure, economists at Bank Leumi and Psagot Investment house now expect the Central Bank to raise borrowing costs by at least 25 basis points to 4.75% next week.
Bank Leumi chief economist Gil Bufman predicts that the Bank of Israel will raise interest rates in its next decision to 4.75% or 5%.
“The Central Bank is not expected to start cutting borrowing costs in the near future,” Bufman said.
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