After numbers revealed a larger-than-projected budget deficit in 2012, inflation figures for the year continued to indicate an economic slowdown.

The year-end summary released by the Central Bureau of Statistics on Tuesday revealed that the increase in the price index hit a six-year-low 1.6 percent, well within government target projections of 1-3%.

The low index was driven by reduced prices in fruits and vegetables (3-29%), 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%), health services (5%), dairy products (4.1%) and gasoline (5.1%). Municipal taxes (arnona) rose 3%, and the price of cigarettes increased some 20%.

Projections 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.