The consumer price index rose in September by 0.2%, above forecasts that assumed it would remain unchanged or rise by 0.1% at most. Also, the annual inflation rate remained 4.6% as in August – although the drop in fuel and vacation prices was supposed to support its drop.
According to the data of the Central Bureau of Statistics (CBS) published today (Friday), since the beginning of the year the consumer price index has increased by 4.3%.
Notable price increases were recorded in the categories of fresh vegetables and fruits (+3.3%), health and education services (increase of 1% each) and housing and furniture and home equipment which increased by 0.6% each. Prominent price decreases were recorded in culture and entertainment (-1.2%), transportation and communication (-0.5%) and food (excluding vegetables and fruits, -0.4%).
The discounting of food details is mainly seen in the holiday products. The prices of fresh fish fell by 7%, the price of honey fell by 5.7% and further declines were recorded in products such as tahini, rice, oils, cakes and soft drinks. Chicken and turkey livers (6.3%) and dairy products became especially expensive, mainly due to the 4.9% increase in the prices of controlled products at the beginning of September.
In the fresh vegetables sector, significant price increases were recorded in basic products such as peppers (11.4%), cucumbers (11%), tomatoes (5.7%) and onions (2.7%). In fruits, the prices of watermelons increased by 47.8%, the prices of oranges increased by 5.4% and the prices of grapes increased by 4.5%. The prices of pomegranates fell by more than 19% in preparation for Rosh Hashanah, and the prices of peaches and apples also fell.
The clothing and footwear index remained unchanged after deducting seasonal effects. Noticeable increases were recorded in the prices of socks for children and outerwear and underwear for men, while summer products such as swimwear sold in deep end-of-season sales were discounted.
The health price index increased by 1%, partly due to a 2.1% increase in the cost of health insurance services at health funds and insurance companies. Lenses and eyeglass frames also went up at a similar rate, as well as oral hygiene products. On the other hand, discounts of about 2% were recorded in nutritional supplements.
With the students returning to school, it is disappointing to find out that the price index for education services jumped by 1% compared to last year. The index of payments for pre-primary education jumped at a sharper rate of 5.5%.
As expected, the peak of the holiday season is behind us, so the prices of accommodation, vacations and trips fell by about 8.5%, and the entrance fees to gardens, parks and attractions also dropped. The prices of trips abroad decreased by 4.9%.
The rent continues to climb, the input index unchanged
Rent prices in Israel continue to climb, and in the September index they climbed by 0.7% (without public rent). The Central Bureau of Statistics states that approximately 84% of the tenants are under an existing contract, so the index regarding them remains practically unchanged. For 12% of the tenants who renewed a contract, an increase of approximately 3.5% was recorded in the rent, and for 4% of the tenants (apartments in the sample where there was a change of tenant) an increase was recorded A sharp 8% increase in the monthly rent.
The residential construction input price index remained unchanged in September. Since the beginning of the year this index has increased by 4.9%, in the last 12 months it has jumped by 6%.
In September, among other things, price increases were recorded in the prices of finished products made of wood and other materials by 3.4%, other concrete products became more expensive by 3.1%, marble by 1.9% and stone by 1.1%. On the other hand, price decreases were recorded in the prices of wood for construction (-7.3%), cement (-3%), gravel, industrial partitions and elevators (1.6% each), iron nets (-1.2%) and iron for construction (-1.1%).
The highest increase in apartment prices in a decade
Comparing the prices of the transactions carried out in the months of July-August 2022 compared to the prices of the transactions carried out in the months of June-July 2022, it was found that the prices of apartments increased by 1.9%, thus completing a 19% increase compared to the corresponding period last year (July-August 2021). This is the highest annual price increase in a decade, the CBS notes.
Price increases were recorded in all districts in comparison between June-July and July-August: Jerusalem (2.8%), North (2.6%), Haifa (2%), Center (1.8%), Tel Aviv (1.9%) and South (1%).
Compared to the corresponding period last year, July-August 2022 compared to July-August 2021, price increases were also recorded in all districts: Center (21.2%), North (20.3%), Haifa (20.1%), Jerusalem (17.6%), Tel Aviv (17.1 %), South (16.2%).
In the USA the inflation data disappointed, in Spain and France a pleasant surprise
The published data is not expected to have a material impact on the Bank of Israel’s next interest rate decision, which will take place on November 21, since a week before the decision the next price index, for the month of October, is published. At the same time, this is a disappointment since in August a negative index was recorded for the first time this year in Israel. The index decreased by 0.3% and the annual inflation rate was reduced to 4.6% (when in July it jumped to 5.2%). This was a better figure than the forecasts, which estimated a monthly decrease of 0.1%-0.2%, and this is mainly thanks to the decrease in fuel prices and vacations. This time, as mentioned, we did not get a pleasant surprise.
Yonatan Katz, the Chief Economist at Leader Capital Markets, said in response to the index: “Inflation in September surprised a bit upwards with an increase of 0.2% compared to expectations of 0.1% or even zero. The acceleration in housing prices (rental prices) continues in the index as well as in purchase prices. The significant figure was The 8% increase in rental prices in the case of changing tenants. Rental prices in the index are expected to continue to rise and contribute to inflation. The Bank of Israel is expected to raise the interest rate by 0.5% (and possibly by 0.75%) on November 21 and continue to raise it up to 3.75% at the end of the quarter the first of 2023”.
Yesterday the price index was published in the US, showing that the central bank’s sharp interest rate hikes are failing to cool inflation as expected. The index jumped in September by 0.4% and the annual inflation rate reached 8.2%. This is a decrease compared to the 8.3% measurement in August, but the forecasts were for an increase a more moderate monthly increase of 0.2% and the annual rate falling to 8.1%. The core price index, which excludes volatile energy and food prices, was particularly disappointing, jumping 0.6% in September. The annual core inflation rate continued to climb and stood at 6.6% in September, an increase compared to the figure of August (6.3%) and higher by a tenth of a percent than the forecasts.
Apart from Israel, consumer price indices were also published today in France and Spain. In France, the consumer price index decreased by 0.6% in September, beyond forecasts that estimated a decrease of 0.5%. The annual inflation rate dropped from 5.9% in August to 5.6%, in line with forecasts. Spain also saw a faster than expected moderation: the index fell by 0.7% (a 0.6% drop was expected) and the annual rate of inflation dropped from 10.5% last month to 8.9%, when market analysts estimated it would drop to 9%.