Consumer Price Index And Inflation Data For February

Bottom line: The Consumer Price Index (CPI) declined again in February, this time by 0.2%, after January’s 0.6% plunge. February’s fall was in line with expectations, but that doesn’t change the underlying fact – that the annual rate of inflation is steadily falling. Indeed, the CPI net of its housing component (which measures rentals, not purchase prices) rose by only 0.6% in the 12 months through February, compared to 1.2% for the overall index (see graph).

  • Clothing prices were the primary contributor to February’s decline, as they were in January. Together with footwear, the apparel sectors pushed the CPI down by 0.15%. The explanation is probably – still – unseasonably warm weather.
  • A  broad range of sub-indices also declined, including fresh vegetables, telecommunications costs, petrol, milk and frozen meat,although each on its own  contributed relatively little to the overall decline.
  • Going in the other direction was the housing sub-index. This rose by 0.4%, reversing most of its fall in January.
  • On the other hand, the House Price Index, which is not part of the CPI, hardly rose (0.1%) in the latest report (covering Dec 2012–Jan 2013 tto Dec 2013–Jan 2014). As a result, the rate of increase over the preceding 12 months dropped sharply, to 6.3% in this latest report, from 8% in the previous one.
  • Most of the other price indices published by the Central Bureau of Statistics also fell in February, raising concerns that deflationary forces are becoming stronger in the Israeli economy.  
Change in the CPI and in the CPI net of the housing sub-index,  January 2013 – February 2014 (indices based on average 2012=100).

Change in the CPI and in the CPI net of the housing sub-index,
January 2013 – February 2014 (indices based on average 2012=100).

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