The consumer price index for the month of October, which was published yesterday, was a negative surprise and increased by 0.6%, contrary to early forecasts for an increase of 0.4%-0.5%. Recall that the September index rose by only 0.2%.
Notable price increases of 4% were recorded in the prices of vegetables and fruits, as well as in the prices of vacations and recreation. Food prices also increased by 1%, and this is even before taking into account the wave of price increases of the last few days.
The rental prices of apartments continued to rise in the last month by 0.5%, and they are expected to continue to rise. The rate of increase in housing prices that are not included in the index has slowed somewhat, and last month they increased by 1.1% compared to 1.9% in last month’s measurement. Despite this, the rate of increase in housing prices rose to 19.8% per year. Following last month’s price increases, the annual inflation rate rose from 4.6% to 5.1% per year.
Following the abnormal increase in the index, the governor of the Bank of Israel is expected to raise the interest rate by at least 0.5%. If so, the Bank of Israel interest rate will reach 3.25% per year and the prime banking interest rate will soar to 4.75% per year.
The increase in the interest rate will mainly hurt the borrowers attached to the prime rate and the customers who are overdrawn. The heads of the business sector yesterday called on Bank of Israel Governor Prof. Amir Yaron to refrain from raising interest rates. The President of the Industrialists Ron Tomer claimed that the continuation of the interest rate increase will seriously harm the industrialists and will cause an increase in prices and an acceleration of the rate of inflation. The president of the Union of Chambers of Commerce Uriel Lin severely attacked the government’s policy, and called for reducing production costs, such as property tax and electricity payments, which are among the generators of the cost of living in Israel.