The bank's analysts have revised their inflation expectations following the surprising gain in the CPI in June.
Bank Hapoalim has revised upwards its inflation forecast for 2007, following the unexpected 0.7% rise in the Consumer Price Index (CPI) in June. The bank now expects inflation to reach 2.2% in 2007, up from last month's forecast of 1.8%.
Bank Hapoalim had expected the CPI to rise by 0.5% in June and as a result of the higher-than-expected rise, it has revised upwards its forecast for the July CPI to 0.5% from 0.3%. The bank believes that the gain in July will be driven primarily by the depreciation in the shekel against the dollar, affecting chiefly the housing item which is sensitive to changes in the dollar, and which has a wide ranging affect on all index components because of its significant weight.
Bank Hapoalim expects that the gain in the CPI in July will also be affected by increases in fuel prices, as well as seasonal increases in prices of holiday packages in Israel and overseas.
Published by Globes [online], Israel business news - www.globes.co.il - on July 16, 2007
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