Consumer price index down 0.2%
September CPI affected by reductions in prices of fruit, dairy products; price hikes recorded in housing, fuel and electricity
As a result, the actual inflation rate for the past 12 months (September 2011 CPI compared to September 2010 CPI) now totals 2.9% - within the annual inflation target range set by the government (1-3%).
The inflation trend in the past four months is much lower, totaling only 0.3%.
Last month's CPI was mainly affected by price reductions in the following consumption areas: Fresh fruit (16.5%), convalescence and vacations abroad (3.1%), milk and dairy products (4.3%) and frozen vegetables (1%).
These price reductions were partially compensated by price hikes in the following areas: "Housing (1%), petrol (1.1%), fresh vegetables (4.4%) and electricity (3.5%).
Capital market analysts estimated Friday that the negative CPI and the inflation rate's alignment into the annual target range will prompt the Bank of Israel to leave the interest rate for November unchanged at 3%.
According to estimates, the central bank will choose to wait and examine the affect of last month's interest rate drop on the price levels and economic activity.
Estimate: Housing prices to stabilize
The decision on the economy's interest rate for November will be made for the first time by the Bank of Israel's Monetary Committee, which was handed all of the governor's authorities last week.
Alex Zabejinsky, chief economist at DS Investment and Securities, said in response: "The CPI was lower than expectations, but if it wasn't for the rising rent prices – it would have dropped by 0.6%.
"The effect of the social protest and slowdown in demands was expressed in many clauses, mainly in food prices which fell significantly. Nonetheless, we won't be surprised to see food prices return to their previous level, before the September reductions, in October."
"The price reductions balanced the hikes in rent prices, which are expected to continue as most buyers are 'sitting on the fence', waiting for apartment prices to fall while increasing demands in the rent market," he added. "We believe apartment prices will stabilize soon and will begin dropping in 2012."
- Follow Ynetnews on Facebook
