In January, the consumer price index (CPI) in Israel maintained stability, showing no change compared to the previous month. Over the last year, from January 2023 to January 2024, the index experienced a decline from 3% to 2.6%, aligning with economists’ predictions of a drop to the range of 2.6% to 2.7%.
Several notable trends emerged within various sectors. Prices in the miscellaneous category rose by 0.7%, while health and food and housing sectors each saw a 0.6% increase. Conversely, clothing and footwear, as well as culture and entertainment, experienced a 1.0% decrease. Additionally, transportation costs dipped by 0.4%, with vegetables and fruits seeing a 0.5% decrease.
Notably, apartment prices continued their upward trajectory, increasing by 0.7% compared to the previous period. When examining different regions, Jerusalem saw a decline of 1.3% in apartment prices, while the North and Haifa experienced increases of 1.9% and 1.2%, respectively.
The data also revealed insights into new apartment prices, which rose by 0.9% during the same period. However, an annual comparison showed a decrease of 1.4% in the apartment price index, with notable drops in Tel Aviv (-4.4%) and Jerusalem (-1.3%).
Matan Shetrit, chief economist at the Phoenix Group, commented on the inflation data, noting that the CPI remains on a favorable trajectory. He highlighted a decline in both overall inflation and core inflation, the latter excluding energy, fruits, and vegetables. Hence, if this trend persists, it may lead to a favorable outcome in the forthcoming months regarding the central bank’s assessment of future interest rate policies.
However, factors that can potentially cause inflation to rise remain present, among them are economic recovery, the strength of the shekel, and anticipating VAT increase in January 2025.
In summary, while inflation remains moderate and housing prices continue to rise, economists anticipate a cautious approach to interest rate adjustments by the Bank of Israel in response to evolving economic conditions and global trends.
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