Jerusalem's economic circles are reeling from the shocker 1.3% climb in consumer prices in June 2002.
Analysts had expected a moderate climb of half a point to 0.7% in the consumer price index, but the reality lifts inflation to 9%, in annualized terms, according to the Central Bureau of Statistics.
The CPI, which jumped for the sixth straight month, was pushed up by the shekel's continuing fall which dollar-related prices such as housing, and government steps to decrease its spending, such as raising VAT value added tax from 17% to 18%.
The index was also pushed higher due to strong increases in clothing and footwear and fuel prices, the statistics bureau said.
Annualized inflation of 9% is a far cry from the government target of 2% to 3% for 2003. Price rises in the first half of 2002 reached 6.5%.
Economists had predicted that June would bring the last high CPI rise. Nessuah Zannex analyst Shlomo Maoz had predicted that the CPI would rise by only 0.25% in July. Bank Hapoalim's Ptahiya Bar Shavit had predicted a zero increase.
Bank of Israel governor David Klein is not expected to cut interest rates for August, but to leave the nominal rate on central bank sources at 9.1%.