Consumer Price Index and Inflation Data for June and January-June 2014
Bottom line: The Consumer Price Index (CPI) rose by 0.3% in June, slightly above the consensus expectation. However, the primary factor in this rise was a jump in clothing prices — a seasonal development and hence transient. The underlying trend is toward ever-lower rates of inflation and, excluding housing prices, the Israeli economy is already experiencing deflation (see graph).
- The clothing sub-index jumped 11.5% in June, and contributed 0.25% to the rise in the overall index. The Central Bureau of Statistics noted that this is a seasonally-driven event, as summer clothes are repriced from last year’s levels.
- Other seasonally–driven sub-indices, such as fresh fruit, pushed in the opposite direction, but with much less impact.
- The other sub-index contributing to the overall rise was housing — which measures rental prices and posted a rise of 0.4% in June.
- The index of house prices, which is not part of the CPI, rose by 0.5% in the latest month, and its 12-month rate of increase climbed from 8.0% to 8.8%.
- Other than in the housing sector, price pressures are almost absent. Despite the 0.3% rise in June, the CPI showed no change over the first six months of 2014, and in the twelve months from July 2013 it rose by only 0.5%.
- The CPI net of its housing sub-index fell by 0.5% in January-June and by 0.2% in the twelve months through June.
- The Wholesale Price Index of Industrial Output for Domestic Uses dropped by 0.5% in June, by 0.8% in the first half of 2014 and by 1.1% in the twelve months through June.