consumer price index for July rose by no less than 1.1% - yearly by 5.2%

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by Ifi Reporter Category:Capital Market Aug 15, 2022

Even before the increase in electricity prices that came into effect in August, the consumer price index for the month of July rose by no less than 1.1%, and the annual inflation in Israel now reaches 5.2%, still very low compared to most Western countries, but this is a very significant increase - the highest since 2008 This is according to the data of the Central Bureau of Statistics published on Monday.
The Central Bureau of Statistics also published the housing price index, which is measured separately from other consumer prices. From the comparison of the prices of the transactions carried out in the months of May 2022-June 2022 compared to the prices of the transactions carried out in the months of April 2022-May 2022, it was found that the prices of the apartments increased by 2% and thus completed an increase of 17.8% compared to the corresponding period last year (May 2021-June 2021). Last month, the annual rate of increase in apartment prices was 15.9%.
The residential construction input price index increased by 0.5% in July 2022, and in the last 12 months (July 2022 compared to July 2021) the residential construction input price index increased by 6.8% - which is expected to lead to additional price increases in the future.
The Central Bureau of Statistics reports that the non-public rent section increased by 0.6%, but notes that approximately 86% of the tenants are under an existing contract and therefore the index for them remains almost unchanged, for the 10% of tenants who renewed a contract there was an increase of approximately 3.5% And for 4% of the tenants (apartments in the sample where there was a change of tenant) there was an increase of about 7%.
A jump in the rate of inflation, apartment prices and rental prices: Even before the increase in electricity prices that came into effect in August, the July consumer price index rose by no less than 1.1%, and the annual inflation in Israel now reaches 5.2%, still very low compared to most Western countries, but This is a very significant increase - the highest since 2008. This is according to the data of the Central Bureau of Statistics published today (Monday).
The CBS also published the apartment price index, which is measured separately from the other consumer prices. From the comparison of the prices of the transactions carried out in the months of May 2022-June 2022 compared to the prices of the transactions carried out in the months of April 2022-May 2022, it was found that the prices of the apartments increased by 2%, thus completing an increase of 17.8% compared to the same period last year (May 2021-June 2021). Last month the annual rate of increase in apartment prices was 15.9%
The residential construction input price index increased by 0.5% in July 2022, and in the last 12 months (July 2022 compared to July 2021) the residential construction input price index increased by 6.8% - which is expected to lead to additional price increases in the future.
The Central Bureau of Statistics reports that the non-public rent section increased by 0.6%, but notes that approximately 86% of the tenants are under an existing contract and therefore the index for them remains almost unchanged, for the 10% of tenants who renewed a contract there was an increase of approximately 3.5% And for 4% of the tenants (apartments in the sample where there was a change of tenant) there was an increase of about 7%.
According to the CBS, notable price increases were recorded in fresh fruit items which increased by 8.5%, transportation which increased by 3.3%, housing which increased by 1.2%, culture and entertainment which increased by 1.2% and miscellaneous items which increased by 1%. Notable price decreases were recorded In the clothing and footwear section which decreased by 4%.
In the segmentation of apartment price changes by districts in the months of May-June 2022 compared to the months of April-May 2022, price increases were recorded in all districts: Jerusalem 3.0%, North 2.6%, Haifa 2.3%, Center 1.7%, Tel Aviv 2.0% and South 1.0%. Compared to the corresponding period last year, May-June 2022, compared to May-June 2021, price increases were recorded in all districts: Central (20.5%), Jerusalem (18.3%), Tel Aviv (17.6%), Haifa (16.4%), North (14.6 %) and South (14.3%).
In the new apartment price index, it was found that their prices increased by 2.1% in the months of May-June 2022 compared to the months of April-May 2022, completing a 17.5% increase compared to the corresponding period last year (April-May 2021). The percentage of transactions that were carried out with government support and participated in the calculation is 26.8% compared to 28.5% in the previous period (April-May 2021). In the second quarter of 2022, the average price nationwide was NIS 1.88 million, a 4.4% increase compared to the average price in the previous quarter (NIS 1.8 million).
Despite the increase in the inflation rate, Israel is, as mentioned, still far behind compared to inflation in the US, which now stands at an annual rate of 8.5%, and a rate of 9.4% in Great Britain.
Against the background of the inflation data, the monetary committee at the Bank of Israel, headed by Governor Prof. Amir Yaron, is expected to decide on August 22nd on a fourth consecutive increase of the basic interest rate in the economy. This sharp increase in prices will oblige the Bank of Israel to raise the interest rate by 0.5% this coming Monday and it is possible that the central bank will surprise again and raise the interest rate beyond the forecast, as it has done in the last three interest rate increases.
In the first three increases - after three and a half years in which the interest rate in Israel did not rise - the Bank of Israel surprised with a less moderate increase than was observed in the economic system and it already rose from the lowest rate of 0.1% in April to 1.25% in July.
In doing so, the prime interest rate jumped from 1.6% to 2.75%. If the Bank of Israel does not settle for a quarter percent increase and raises the basic interest rate next month by another half percent to 1.75%, the prime interest rate will already be more than double what it was in April - 3.25%. In any case, the increase in the basic interest rate in Israel is expected to moderate consumption in the economy at least a little in the coming months and cool down the real estate market, which is expected to curb the wave of price increases at least partially.
Recall that the Consumer Price Index is an index of the Central Bureau of Statistics (CBS) that measures the percentage change over a period of one month in the expenditure needed to buy a fixed basket of groceries and services. In order to calculate the index, the CBS regularly conducts surveys to determine the average consumption of The households, i.e. the representative basket, regularly measure all the components of the index and the changes in them and thus get the absolute change in the monthly index. The index is published every 15th of the month for the month preceding it.
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