The CPI fell 0.4% in January; Apartment prices have climbed 3% in the past year – industry and macro


The CPI fell 0.4% in January 2020 compared to December. The decline is at the deep end of forecasters’ forecasts, which were expected to fall by 0.3% -0.4%.

Forecasters are also forecasting a decline of 0.1 percent in February, but forecasts for inflation in 2020 as a whole are positive. However, the additional strengthening of the shekel in recent weeks may work to curb inflation.

In 2019 inflation was only 0.6%, and this was the sixth consecutive year that inflation was lower than the Bank of Israel’s target range (3% -1%). The decline in the January index lowers actual inflation (the change in the CPI in the last 12 months whose data is known) to only 0.3%.

Fruits and Vegetables

Fruits and VegetablesPhoto: Ilan Assage

The consumer price index saw significant price declines in January in apparel and footwear (6.4%), food (0.5%), and culture and entertainment (0.8%). In contrast, prices of fresh vegetables and fruits rose 3.1%.

The housing component of the CPI fell by 0.4% in January. Generally, housing prices are precisely those of inflation engines – and the index, excluding the housing item, has decreased by 0.3% in the last 12 months.

The electricity supply for domestic consumption fell by 4% in January following the update of the electricity tariff. In contrast, the water and sewage section increased by 3.6% and the municipal tax rate climbed by 1.8%. The accommodation, recreation and missiles section was down 6.6%.

In addition, in the housing price index (which is not weighted in the CPI), there was a monthly increase of 0.2% in November-December 2019 compared to October-November. According to data released Friday by the Central Bureau of Statistics, housing prices have climbed 3% in the past 12 months, compared with a 3.4% annual increase reported a month ago.

Monthly declines in housing prices were measured in the Northern (0.4%), Central (0.4%), Jerusalem (0.2%) and Tel Aviv (0.2%). Prices remained unchanged in the Southern District, and in Haifa they rose by 0.7%. On an annual basis, price increases were measured in all of Israel’s districts – especially in Tel Aviv (5.7%), the north (3.8%) and Haifa (1.8%).

The new housing price index saw a monthly increase of 0.5%. However, on an annual basis, it dropped by 3%. The national average price of a deal to buy an apartment in the fourth quarter was NIS 1.5304 million – a very slight increase compared to the previous quarter (NIS 1.529 million).

The CPI in residential construction rose by 0.2% in January, and by 0.6% in the last 12 months. This measure is used to link certain payments in new property sales transactions.

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