Capital market analysts today predict that the Consumer Price Index (CPI) will rise by 0.5% in May. The Central Bureau of Statistics will announce the CPI for May on Wednesday.
Analysts believe that the housing item (rent), which accounts for 22% of the CPI, boosted inflation in May. They believe that rising rent will continue to affect the CPI.
They also expect a 14% rise in prices for fruits in May, as it does every May, as summer fruits are included in the CPI. The food item rose 1%, due to higher prices for dairy products, fish, and coffee. Fuel prices, which rose by over 3% in May, will affect the energy products item, due to rising oil prices (in dollar terms), which was partly offset by the strengthening of the shekel against the dollar.
Prices for foreign travel are expected to fall due to seasonal factors.
If the analysts' forecast materializes, it will mean that inflation for the preceding 12 months will be 4.1%, well above the 1-3% price stability target ceiling. However, the analysts' consensus on 12-month inflation expectations is down to 3%. This is because of the Bank of Israel's interest rate hikes. So far this year, the Bank of Israel has raised the interest rate by 125 basis points from 2% to 3.25%. Last month's interest rate hike took analysts by surprise. Analysts do not expect Governor of the Bank of Israel Prof. Stanley Fischer to raise the interest rate for July.
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