In line with expectations: the consumer price index rose in February 2024 by 0.4%. In the last 12 months (February 2024 vs. February 2023), the consumer price index increased by 2.5%.
This was announced today (Friday) by the Central Bureau of Statistics. Let’s recall that the analysts’ expectation was for the index to increase by about 0.3-0.4% and a further moderation in the annual inflation rate to 2.5% compared to the 2.6% figure recorded at the end of January.
Fruits in the market, photo: Oren Ben Hakon
Notable price increases were recorded in the sections: fresh fruit which increased by 10.7%, footwear which increased by 1.4%, culture and entertainment which increased by 1.2%, miscellaneous which increased by 1.0%, apartment maintenance which increased by 0.9%, food, furniture and household equipment and transportation which increased by 0.7%, each.
Notable price decreases were recorded in the sections: clothing which decreased by 2.5% and housing services owned by the tenants which decreased by 0.6%.
Rent
In the monthly rent, for the tenants who renewed a contract, an increase of 3.0% was recorded and for the new tenants (apartments in the sample where there was a change of tenant) an increase of 4.5% was recorded.
A 3.0 percent increase in rent, photo: Yehoshua Yosef
The rise in apartment prices
From the comparison of the prices of the transactions carried out in the months of December 2023 – January 2024 compared to the prices of the transactions carried out in the months of November – December 2023, it was found that the prices of the apartments increased by 1.2%. Segmented by districts, price increases were recorded in all districts: Jerusalem (1.4%), North (1.1%), Haifa (1.5%), Center (1.1%), Tel Aviv (1.1%) and South (1.8%). The prices of new apartments increased by 0.4%.
An annual comparison of the prices of the transactions carried out in the months of December 2023 – January 2024 compared to the prices of the transactions carried out in the months of December 2022 – January 2023 shows that the annual apartment price index decreased by 0.6%. When segmented by districts, price increases were found in the following districts: North (3.8%), Haifa (2.9%), South (1.6%) and Jerusalem (1.1%). On the other hand, price decreases were found in the following districts: Tel Aviv (3.7%) and Central (1.1%). The annual new apartment price index decreased by 2.2%.
Will interest rates drop soon?
Let us recall that the target range of the Bank of Israel is the annual inflation level of between 1-3%, and at the end of December inflation in Israel began to converge within this target. This, after almost two years that it was high and even crossed the 5% threshold.
money bills. The shekel maintains its strength, photo: Reuters
The moderation of inflation together with the shekel that maintains its strength cause the markets to believe that the Bank of Israel will continue the process of lowering interest rates. The interest rate market is currently pricing an interest rate cut on April 8 with a 70% probability. As of today, the interest rate of the Bank of Israel is 4.5%. Last January, the Bank of Israel announced the lowering of the interest rate by 0.25% from 4.75% to 4.5%. In February, the interest rate remained unchanged mainly due to a high level of uncertainty in the security arena. The expectation is that the interest rate of the Bank of Israel will continue to decrease and will reach at the end of this year about 3.5%.
“Fear of business collapse”
Rami Beja, chairman of the Histadrut’s independent and freelancers’ forum, responded to the publication of the consumer price index: “The consumer price index, which keeps inflation within the target range of the Bank of Israel, is a clear sign that the time has come to accelerate interest rate cuts.
“I call on the governor of the Bank of Israel to act to lower the interest rate. There is a real fear of the collapse of businesses that had to increase their credit since the beginning of the war, in order to manage the flow of the business and pay its expenses.”
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