CBS: August CPI Rises by 0.8%

The housing maintenance item rose by 3.7% contributing 0.6% to the CPI. The rent item rose by 3.5%, contributing 0.1% to the CPI. Food costs edged down by 0.1% in August
 
The Central Bureau of Statistics (CBS) announced last week that Israel's Consumer Price Index (CPI) rose by 0.8% in August to 107 points.
 
Inflation has already hit 4.4% for the first eight months of 2008 - far above the overnment and the Bank of Israel's target, of 1-3% for the entire year. (Inflation for the past 12 months now stands at 5%. This is the highest gain in the August CPI since 1995. The rise was at the upper end of market expectations of 0.5 - 0.8%.
 
Due to the ongoing inflation, Bank of Israel Governor Stanley Fischer is expected to raise interest rates by 0.25 percentage points at the end of the month, for the fifth time in a row. This would peg Israel's key lending rate at 4.5% for October.
 
The housing maintenance item rose by 3.7% contributing 0.6% to the CPI. The rent item rose by 3.5%, contributing 0.1% to the CPI. Food costs edged down by 0.1% in August, with the price of rice falling 8.2% and instant coffee prices dropping 7.1%. However, prices for fresh vegetables rose by 12.5%, which also added to the CPI. Water and electricity rates also rose last month. Three key items kept the CPI in check: fuel fell by 4.4%, footwear fell by 6.5% and clothing fell by 9%. Housing prices rose steeply, by 3.7%, but health costs were unchanged.