The Central Bureau of Statistics has announced that the consumer price index in May 2024 increased by 0.2%, maintaining an annual inflation rate of 2.8%. This rate aligns with the previous month and remains within the Bank of Israel's target, avoiding the surpassing of the critical 3% mark. Economists had anticipated a higher monthly increase of 0.5%-0.6%, which would have pushed the annual rate to 3.2%.
Notable price increases were recorded in fresh fruit (10.3%), clothing and footwear (2.2%), and both food and entertainment (1.0%). Miscellaneous categories showed a 0.5% increase, while housing and furniture prices saw a 0.4% rise. Conversely, prices of fresh vegetables dropped by 2.4%, and transportation costs decreased by 1.7%, indicating some balance in the overall price level fluctuations.
The housing market continued its upward trend with apartment prices increasing by 0.9% between March and April 2024. When segmented by districts, Haifa led with a 1.6% rise, followed by Tel Aviv at 1.1%, South at 0.9%, Jerusalem at 0.8%, Center at 0.6%, and North at 0.5%. Annually, apartment prices have surged by 2.1%, with Haifa experiencing a significant 6.6% increase.
Rent prices also escalated, with a 2.5% rise for tenants renewing contracts and a 3.7% increase for new tenants. This trend has exacerbated concerns about housing affordability. The president of the Ha'aretz Builders Contractors Association, Raul Sargo, warned of a potential housing crisis, urging government action to address the construction industry's challenges.
Additionally, the residential construction input price index rose by 0.5% to 130.1 points, driven by a 1.9% increase in labor wages and a 3.3% rise in equipment and car rental costs. Since the beginning of the year, this index has increased by 0.7%. The annual increase stands at 1.2%.
In the broader industrial sector, the price index for industrial output for local destinations decreased slightly by 0.1% in May 2024. However, when excluding fuels, the index saw a minor 0.1% increase. Over the past year, the industrial output price index rose by 2.4%, while the index without fuels increased by 1.2%. This indicates a relative stability in industrial pricing, despite minor monthly fluctuations.
- The price trends in specific materials and products show mixed results. Prices increased by 4.2% for paints, 2.9% for iron nets, 1.6% for construction iron, and 1.2% for wall and floor tiles. On the other hand, cement prices saw a decline of 3.0%, and prices for outdoor facilities dropped by 0.9%. This mix reflects varying pressures on the construction sector.
- In terms of wage dynamics, the wage price index for those employed in the industry increased by 0.4% in May 2024. Among specific service sectors, significant increases were noted in advertising services (16.0%), employment services (3.7%), and accounting services (1.4%). Contrary to these trends, prices for legal services and publishing services of books and periodicals fell by 1.3% each.
