The consumer price index rose by 0.4%, inflation moderated but apartment prices rebounded

The consumer price index rose in February by 0.4% – slightly above expectations. This is what the Central Bureau of Statistics announced today. However, the rate of inflation (the increase in the index in the last 12 months) moderated in Israel and reached 2.5% in February compared to 2.6% in January 2024. At the same time, the trend of rising apartment prices in Israel continues.

The index rose in February by 0.4% mainly due to seasonal items, such as fresh fruit which jumped by 10.7%. On the other hand, noticeable price decreases were recorded in clothing items, which decreased by 2.5%, and housing services owned by the tenants, which decreased by 0.6%.

The rent increase rate continues to be high with a 3% increase for tenants who renewed a contract and a 4.5% increase for tenants with new contracts. The rate of inflation slowed due to departure from the annual index of February 2023 data, which were relatively high.

After the change in trend in the previous CBS data of apartment prices, which returned to rising, even in the data published today by the CBS, a price increase in the housing sector was recorded again. During December 2023-January 2024, apartment prices increased by an average of 1.2% compared to November-December 2023 – a high rate of increase, compared to an increase of 0.7% in the November-December 2023 data.

The sharpest increase was recorded in the southern district with 1.8%, in Haifa prices increased by 1.5%, in Jerusalem by 1.4% and in the center and Tel Aviv by 1.1%.

Overall, during the last year, apartment prices decreased by 0.6%, and this is in light of the price decreases in previous months.

The early estimates were that the price index for February would increase by 0.3%, among other things due to seasonal changes as well as due to price increases in the food and consumer goods sector. Accordingly, the rate of inflation was supposed to moderate to about 2.5%, compared to a rate of 2.6% in January.

The monetary committee of the Bank of Israel is expected to announce the interest rate in the economy on April 8. The governor of the Bank of Israel, Prof. Amir Yaron, recently said that as soon as it is evident that the rate of inflation stabilizes in the area where it is now – below the upper limit of the Bank of Israel’s target (1%-3%) – the interest rate in the economy will go down again. According to the minutes of the monetary committee discussions, one of the five members of the committee voted in favor of lowering the interest rate also in the decision in February, while four others believed that the interest rate should be left unchanged.

Apartment prices showed a change in trend in the previous LBS data. After a price drop in the last year, in transactions carried out in November-December 2023, apartment prices increased by 0.7% compared to the prices of transactions carried out in October-November 2023.