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Housing weight rises to 26% in Israel’s consumer price basket

Cityscape, Urban, Building REUTERS/Amir Cohen
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Housing remains the highest household expense for Israelis and has risen as a proportion of total costs, the Central Bureau of Statistics said on Monday in an updated basket of the consumer price index.

Starting with the January CPI that will be issued on Wednesday, housing will have a new weight of 26 percent in the basket, up from 24.7 percent two years ago.

The rise in housing costs as a larger percentage of household costs comes as the weight of transportation and telecoms dips to 17.5 percent from 18.4 percent, while food is now 18.3 percent of the basket, up from 17.9 percent.

Along with high living costs, inflation in Israel was at a 14-year high of 5.3 percent in 2022.

In a bid to move inflation back to a one to three percent target, the Bank of Israel has sharply raised its benchmark interest rate to 3.75 percent from 0.1 percent in April. Central bank officials have said they expect the rate to reach at least four percent in the coming months.

The next decision is on February 20.

In January, Bank of Israel governor Amir Yaron said that a series of government steps aimed at easing inflation and the cost of living were reasonable, but short term interest rates still could rise further.

Prime Minister Benjamin Netanyahu has said Israel would cancel or cut back recent hikes in property taxes, water and energy costs, adding action was needed before the 2023 budget was approved in May.