The March consumer price index rose 0.5% to 104 points, in keeping with projections. This brings the price increases for the first three months of 2002 to 2.4%, after January and February posted 1.1% and 0.8% rises respectively.

The March CPI was affected primarily by a rise in housing prices, apartment maintenance costs, education, culture and entertainment and the transportation item. The CPI rise was moderated by the fresh produce and clothing and footwear items.

The annual inflation trend in March was 6%, while the government inflation target is 2-3%.

The wholesale price index increased 0.9% in March, while residential construction inputs rose 0.2%.

Bank of Israel governor David Klein is slated to announce May lending rates at the end of the month and it is estimated he will announce a moderate interest rate rise. Nonetheless, a number of economists believe Klein will leave key lending rates as they are due to the economic slowdown and the security situation, which are expected to moderate price increases in the coming months.

Most economists estimate that inflation will not erupt and this year¿s inflation rate will be in the 3.5-4.5% range.