The Consumer Price Index rose 0.8 percent in October as prices on clothing and footwear, fruits and vegetables, transportation and communications, housing maintenance and housing moved higher, the Central Bureau of Statistics said Tuesday.
Since the beginning of the year, the overall CPI has risen 2.7%, moving in on the upper limit of the Bank of Israel's 1% to 3% "price stability" target for total inflation for the year. Prices had been rising slowly until an unexpected 1.1% jump in July, followed again by relative stability - a 0.2% rise in August and 0.1% in September - before October's spike.
Excluding fruits and vegetables, CPI growth since the beginning of the year already has hit the 3% mark. Without housing, prices have risen only 2%.
Excluding both fruits and vegetables and housing, the October CPI still rose by almost 0.7%. Clothing and footwear prices rose 3.3% in October, with footwear prices alone up 4.5%, while fruits and vegetables were 3.1% higher led by a 5.6% rise in the price of fresh vegetables.
Transportation and communications prices rose 1.4%, as energy (electricity, benzene, oil, and diesel) became 3.5% more expensive. The expenses of traveling abroad rose 2.5%.
Last month's inflation was somewhat tempered by lower prices in furniture and household appliances, which dropped 0.5%, and the cost of cultural and entertainment consumption, which fell 0.4% led by a 1.4% decline in the cost of throwing parties and hosting events. The price of car insurance fell 1.3% in October.
Although the sudden surge in prices increases pressure on the Bank of Israel to raise the shekel interest rate for December, the Israel Manufacturers Association repeated its call on the central bank to keep interest rates low in order to encourage economic growth. It argues that the inflation target would be met, nonetheless.
Bank of Israel Governor Stanley Fischer
is widely expected to raise the interest rate by at least one-quarter of a percentage point when the decision is released closer to the end of the month, bringing it to a minimum of 4.25%. Last month, Fischer hiked rates by 0.25 point to 4%, in anticipation of an identical rise by the US Federal Reserve several days later.