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The Consumer Price Index fell a greater-than-expected 0.2 percent in December, led by drops in the prices of fruits and vegetables, transportation and communication, and furniture and home appliances, the Central Bureau of Statistics said Sunday.
The price of fruits and vegetables dropped 6.4% in December, with fresh vegetables alone 14.3% less expensive. Fresh fruits were 1.9% cheaper. Poultry prices fell 2.3%.
Transportation and communication rates fell 0.9%, due to a 3.3% drop in the price of fuels, while the prices of furniture and home appliances sank 0.9% as a group; furniture prices alone dropped one full percentage point.
The cost of vacationing and lounging in spas in Israel and abroad dropped by 1.5%.
While December's inflation was stable when fruit and vegetable prices were excluded, without rising housing prices, the CPI fell 0.4%.
The overall drop in prices was double the median predicted by economists surveyed by Bloomberg, who had anticipated a 0.1% decline.
Relative to the 2002 price average - set at 100 - the overall CPI slipped to 103 in December from 103.2 in November.
December's negative inflation was mitigated by rises in the prices of clothing and footwear (up 7.8%) and housing (0.2%). Clothing was 9% more expensive than in November, the bureau said. The price of water for household consumption rose 3.9%.
Inflation since the beginning of the year remained within the Bank of Israel's 1% to 3% price stability target range, rising 2.4% overall (the highest in three years), 2.9% without fruits and vegetables, and 1.3% excluding housing prices.
Federation of Israel Chambers of Commerce Uriel Lynn added reduced tax on car purchases to the factors contributing to December's negative inflation, and attributed the rise in clothing and footwear prices to seasonal fluctuation. Last year's CPI rate also reflects the importance of consumer spending as a leading engine of economic growth, he said.
Both Lynn and Israel Manufacturers Association economist Ohad Marani called on Bank of Israel Governor Stanley Fischer to keep the interest rate at 4.5% for February, citing the government's continued fiscal restraint.
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