April CPI rises by 0.8%, annual inflation now 4%
The Consumer Price Index (CPI) rose by 0.8% in April, in line with analysts’ estimates.
According to the figures released by the Central Bureau of Statistics, the rate of inflation over the 12 months to the end of April was 4%, which is higher than the government’s target range of 1-3%.
The inflation rate has been above target for the past three months, and is the highest since 2011.
The nationwide average housing rent rose to NIS 4,153.6 in the first quarter of the year from NIS 4,112.6 in the previous quarter.
The Construction Inputs Index rose by 1% in April, and is up by 6.8% for the twelve months to the end of April.
Home prices rose 1.9% in February-March in comparison with January-February. In the five months to the end of March, housing prices rose by 9.3%, marking a 16.3% rise over the last 12 months.
Analysts say that the Bank of Israel will not be able to ignore these figures.
“Although recent figures started to indicate a degree of slowdown in economic activity, it is still probable that the Bank of Israel and the Ministry of Finance will not be able to remain indifferent to the accelerating rate of price rises, although the political situation will block significant policy measures, leaving the ball in the Bank of Israel’s court,” IBI economists write.
“Inflation is higher than the target range, but it is low by global comparison, and does not present the Bank of Israel with any special dilemma. The bank can be expected to raise its interest rate by 25 basis points to 0.6% in its decision next week.”
Leader Capital Markets chief economist Yonatan Katz believes that the central bank will decide on a larger interest rate hike, of 0.4%.
“Without doubt, the inflation environment has risen, not only because of supply factors but also through demand factors and wage pressures. The acceleration in the rate at which housing prices are rising will be a concern for the Bank of Israel and additionally, the economy is on an expanding track, the GDP gap has been closed, and the economy is at full employment.” (Globes/TNS)