Consumer Prices Down Third Month in a Row

Israel’s annual consumer prices declined for the third straight month in November as commodity prices fell worldwide.

Prices dropped 0.1 percent from a year ago, the Central Bureau of Statistics in Yerushalayim said on Tuesday. The median estimate in a Bloomberg News survey of 12 economists was for a 0.2 percent fall. In the month, prices fell 0.2 percent.

“Global commodity prices have been dropping both because of the situation in Europe, as well as declining demand in China and India,” Ofer Klein, head of economics and research at Harel Insurance & Financial Services, said before the data was released.

Oil fell into a bear market this year amid the highest U.S. production in three decades and slowing growth in global consumption. Prices have fallen about 20 percent to the lowest in five years since the Organization of Petroleum Exporting Countries decided not to cut production to tackle the glut at a Nov. 27 meeting. The Bloomberg Commodity Index (BCOM), which measures 22 commodities from corn to zinc, touched the lowest in five years last week as energy prices tumbled.

The appreciation of the shekel in the two years through July, which has since reversed, also contributed to a drop in prices of imported goods, Klein said.

The central bank has cut the benchmark interest rate 12 times since 2011 and purchased foreign currency to weaken the shekel and help exports, bringing reserves to a record $87.6 billion at the end of August. Bank of Israel Governor Karnit Flug said the central bank is examining the need to employ other tools to achieve policy goals, after bringing interest rates close to zero.

Economic growth is forecast to slow this year to 2.3 percent, from 3.2 percent last year, the central bank said in September, in part due to the conflict in Gaza in July and August. Growth is forecast to rise to 3 percent in 2015. 

This article appeared in print on page 38 of the December 17th, 2014 edition of Hamodia.