2010 inflation rate totals 2.7%
Consumer price index up 0.4% in December, Central Bureau of Statistics reports. According to data, this is first time Bank of Israel has met annual inflation goal set by government since 2005
As a result, Israel's inflation rate totaled 2.7% in 2010, making it the first year since 2005 in which the Bank of Israel has managed to meet the annual inflation goal set by the government (1-3%).
Last month saw price hikes in the following products: Footwear (11.5%), clothing (9.3%) and cucumbers (25.2%). The rise in the December CPI was partially compensated by sharp drops in the prices of tomatoes (21.4%) and vacations (2.3%).
The entire year saw a rise in the prices of fresh vegetables (22.4%), fresh fruit (19.9%), cigarettes (11.8%) and footwear (11.7%).
These price hikes were partially compensated by reductions in the prices of electricity (8.3%), chicken (4.6%) and trips abroad (3%).
Capital market experts estimate that the Bank of Israel's ability to meet the inflation goal, along with the low indices expected in the coming months, will allow Bank of Israel Governor Stanley Fischer to postpone his plan to raise the interest rate by at least one more month.
The main reason for a possible delay in raising the interest rate is Fischer's fear that such a move would encourage the inflow of additional foreign capital into Israel, which would help the shekel appreciate against the US dollar and euro.
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