Consumer prices increased in January, led by rise in food, fresh produce costs

Consumer prices increased in January, with Israelis facing higher costs for a range of goods and services, led by a rise in food and fresh fruit prices after a series of tax hikes that came into effect last month, data by the Central Bureau of Statistics shows.

Annual inflation over the past 12 months accelerated to 3.8 percent after declining to 3.2% in December, from 3.4% in November. The government’s target range for the annual inflation rate is between 1% to 3%.

On a monthly basis, the consumer price index (CPI), a measure of inflation that tracks the average cost of household goods, rose by 0.6% after declining 0.3% in December and 0.4% in November and accelerating 0.5% in October. The January figure compared with analysts’ expectations of an increase of between 0.5% to 0.6%.

On January 1, tax hikes came into effect to boost state income and fill a fiscal gap amid high defense expenses in the 15-month multifront war. Value-added tax rose from 17% to 18%. VAT is a consumption tax collected through the purchase of goods and services, and is levied on most consumer goods and services, except for fresh produce.

In January, price increases were seen in the costs of fresh fruit, which rose 2.5%, food items were up 1%, and home maintenance costs were 2.1% higher, according to the statistics bureau. Electricity costs for households edged up 4.1%.

These were offset by price declines in clothing and footwear, which fell 4.2%, while fresh vegetable prices were down 2%. Travel costs, including flights abroad, dropped 5.7%, and prices of hotel stays in Israel declined 5%.

In the real estate market, rents on renewal of contracts rose 2.6%, and rents on contracts for new tenants jumped by 3.3%.