The Central Bureau of Statistics (CBS) revealed last week that the 2012 increase in the price index hit a six-year-low 1.6%, compared to 2.2% in 2011 and 2.7% in 2010. The inflation trend in the past four months is even slightly lower, amounting to an annual rate of 1.4%, well within government target projections of 1-3%.
Projections, calculated by the Bank of Israel as an average of analysts' estimates, indicate that the inflation rate will remain at a similar low, 1.8%, for 2013, despite low interest rates — another indication that the Israeli economy is slowing down.
The low index was driven by reduced in the prices of fruit (5.7%), tomatoes (27.6%), cucumbers (19.7%), educational services (5.8%) and Internet services (9.9%), mobile phone tariffs (10%) due to competitive market reforms, Internet services (10%) and education, where reforms in preschools drove down average prices by 6%.
However, prices of other necessities rose over the year, including housing (3.4%), electricity (8.8%), cigarettes (21.2%), health services (5%), dairy products (4.1%) and gasoline (5.1%). Municipal taxes rose 3%.