February was the second negative inflation month this year – with consumer prices falling 0.3 percent, following a drop of 0.5 percent in January. Prices fell on almost all categories of goods and services, especially in the costs of fruits and vegetables (which were down 7.8 percent), clothing (3.9 percent), and transportation and communications (1 percent).
The one cost that kept rising was housing, which was up another 0.6 percent in February. Over the past 12 months, housing has risen 7.8 percent, the same increase in housing costs that was recorded between January 2014 and January 2015.
According to analysts quoted by business daily Globes, the Bank of Israel was surprised at the negative inflation rate – because it had expected prices to fall even further. Economic growth has not been affected by the deflation, however; the economy grew between 3.3 percent and 3.9 percent over the past year, and consumer demand was up 7.8 percent during that period, they said.