Central Bureau of Statistics: September CPI down by 0.9%

According to CBS this is the lowest monthly figure since January 1986. The fall reflects cheaper prices in most consumption categories such as apparel, transportation & communication
 
The Central Bureau of Statistics (CBS) announced last week that Israel’s September Consumer Price Index (CPI) dropped by 0.9%.
 
According to the CBS this was the lowest monthly figure since January 1986.
The annual rate of inflation currently stands at less than 1%, with prices having risen by 0.8% since the beginning of the year.
 
In a detailed statement issued by the bureau it was noted that two main factors were directly responsible for most of the decline: The appreciation of the Israeli shekel against foreign currencies, and The fall in oil prices.
 
The fall also reflects cheaper prices in most consumption categories, especially apparel, transportation & communication, culture & entertainment, education and housing.
 
However, the CBS emphasized that some of this decline was offset by moderate rises in food, health and household maintenance prices.
 
The negative CPI has elicited wide spread discussion among the Israeli financial community about cuts in the interest-rate.
 
Following the CBS announcement, the Bank of Israel (BOI) is most likely to decide on a 0.25% cut in the interest rate to 5.25% in November. However, if the slowdown in inflation continues further, the BOI will most probably consider a further 0.25% cut in December.
 
Financial circles in Israel believe that a 0.25% cut in interest rate will enable the maintaining of the government’s 1-3% inflation target.