Israel Annual Consumer Prices Fall for 10th Consecutive MonthAlisa Odenheimer
Israeli consumer prices posted a 10th consecutive annual decline in June as the shekel strengthened, fuel costs declined and the government cut utilities charges.
Prices fell 0.4 percent from a year earlier, unchanged from an identical drop in May, the Central Bureau of Statistics in Jerusalem said on Wednesday. That matched economists’ forecasts and compares with the government’s inflation target of 1 percent to 3 percent. From the previous month, prices rose 0.3 percent.
“Most of it is either fuel or one-time price cuts, such as water and electricity,” Yonie Fanning, chief economist at Tel-Aviv based ILS Brokers Ltd. “There is also the effect of the shekel appreciation.”
Oil prices fell more than 45 percent in the past year as the Organization of Petroleum Exporting Countries defended market share through increased output amid rising production outside the group. At the same time, demand has flagged as global growth remains weak.
Fanning predicted inflation will turn positive in September and probably return to the government’s target range in February.
Forecasters’ average expectation for inflation in 12 months’ time was 1 percent in June, down from 1.1 percent in May, according to the Bank of Israel.
Despite the drop in annual prices, economists don’t expect the Bank of Israel to cut the interest rate this month, because the negative inflation is due to global developments and one-time, government-initiated changes. All 11 forecasters surveyed predicted at the end of June that the central bank will hold its 0.1 percent benchmark rate on July 27.