The Consumer Price Index (CPI) fell by 0.5% in January, the Central Bureau of Statistics (CBS) said Sunday, making it the third month in a row with negative inflation.
The inflation rate in the past 12 months totaled 3.3%. The January CPI, without the energy category, dropped 0.4%.
Price reductions were recorded in most categories: The price of petrol plunged 5.5%; the food prices dropped by 0.3%, with a 0.6% drop without fruits and vegetables; the prices of fruits and vegetables, on the other hand, rose by 0.4%, with a 1.1% increase in the prices of fresh vegetables; clothes prices dropped by 4.1%, apparently due to seasonal sales; and apartment prices were down 0.6%.
A 0.8% was recorded in the culture and education category, and a 3.6% drop was recoded in the prices of vacations in Israel and abroad.
A price increase was recorded in public transportation (0.9%), in medications and medical aids (1.4%), and in municipal taxes (0.9%). The health category saw a 0.4% price rise, and the prices of furniture and home equipment were up 0.8%.
'A clear signal to political system'The reasons for the negative CPI include a drop in the demand for Israeli products in light of the global and local financial crisis, which led to mass dismissals, and the manpower cuts and salary freezes in many companies and businesses, which have caused households to reduce their expenses.
The drop in the prices of petrol and food products, which reflects the drop in the prices of goods worldwide, added to the price reduction in Israel. The Bank of Israel's estimates that the Israeli economy's national product will drop by 0.2% in 2009 reveals that this trend is expected to continue, as estimated by analysts as well.
Uriel Lynn, president of the Federation of Israeli Chambers of Commerce, said in response that "the drop in prices is a strong and clear signal to the political system that a national unity government must be formed urgently, not only in order to overcome the economic slowdown, but also and mainly in order to perform the structural changes needed in the Israeli economy, which will guarantee recovery for a long period of time."
Zvi Lavi contributed to this report