Wholesale prices jumped even more in October, rising 2.4% in one month, pointing to higher inflation in the months ahead.
Last month’s rise contrasts sharply with the figure for September, when inflation rose by only 0.1%. October’s rate also contrasts with the rate for October 2003 and 2004, when no rise in consumer prices was reported.
October’s jump in inflation has caused government economists to raise inflation expectations for 2005, which is now forecast to reach 2.8-3%.
October’s steep rise in consumer prices was not unexpected. Rising gasoline prices (5.6%) and a depreciation in the value of the shekel were major contributors to the inflationary surge.
Other contributors were the costs of fruits and vegetables, which rose by 3.1%, and seasonal rises in the cost of shoes, clothing, and travel abroad, up by 3.3%.
The prices of a number of popular vegetables skyrocketed in October. Beets were up by 17.1%, and cucumbers by 13.6%. Those rises were offset somewhat by falling tomato, falafel and pepper prices. Cabbage lovers had an easier time last month, with prices falling by 8.4%.
Due to rising inflation, Governor of the Bank of Israel, Stanley Fischer, is expected to raise interest rates by another 0.25% by the end of November, bringing the rate to 4.25%. Economists expect interest rates to reach 5% by the first quarter of 2006.
Last month’s rise contrasts sharply with the figure for September, when inflation rose by only 0.1%. October’s rate also contrasts with the rate for October 2003 and 2004, when no rise in consumer prices was reported.
October’s jump in inflation has caused government economists to raise inflation expectations for 2005, which is now forecast to reach 2.8-3%.
October’s steep rise in consumer prices was not unexpected. Rising gasoline prices (5.6%) and a depreciation in the value of the shekel were major contributors to the inflationary surge.
Other contributors were the costs of fruits and vegetables, which rose by 3.1%, and seasonal rises in the cost of shoes, clothing, and travel abroad, up by 3.3%.
The prices of a number of popular vegetables skyrocketed in October. Beets were up by 17.1%, and cucumbers by 13.6%. Those rises were offset somewhat by falling tomato, falafel and pepper prices. Cabbage lovers had an easier time last month, with prices falling by 8.4%.
Due to rising inflation, Governor of the Bank of Israel, Stanley Fischer, is expected to raise interest rates by another 0.25% by the end of November, bringing the rate to 4.25%. Economists expect interest rates to reach 5% by the first quarter of 2006.