Israel’s May CPI Falls 0.3% as Annual Inflation Stays at 1.9%

Israel’s consumer price index for May fell 0.3%, the Central Bureau of Statistics said Monday, matching the decline in the same month a year earlier. As a result, annual inflation remained unchanged at 1.9%, still within the government’s 2026 target range of 1% to 3%. The sharpest monthly declines came in fresh vegetables, down 4.9%, and transportation, down 2.7%, while fresh fruit rose 6.7%, clothing 1.9%, culture and entertainment 1.1%, and housing 0.6%.

Because inflation stayed below 2%, analysts now expect Bank of Israel Governor Amir Yaron to follow through on his pledge and cut interest rates at the next Monetary Committee meeting. For renters, lease renewals were up 2.5%, while new tenants, in apartments where occupants changed, saw rents rise 6.8%.

The bureau also released its housing price index, separate from the CPI, covering new and second hand apartments. It showed prices fell 0.3% in March and April compared with February and March, for a 1.3% annual decline. Over the past decade, the article noted three periods of falling prices, in 2018, in the second half of 2023, and again in the latest annual reading.

By region, March-April prices fell in Jerusalem, 2%, Haifa, 1.9%, the South, 0.9%, and the North, 0.2%, while they rose in Tel Aviv, 0.7%, and the Center, 0.2%. On a yearly basis, prices fell in the Center, 3.1%, Tel Aviv, 1.9%, Haifa, 1.1%, and the South, 1.1%, but rose in the North, 2.5%, and Jerusalem, 1.7%. New apartment prices slipped 0.1% over two months and 3.9% year on year.

The share of new-home deals under government subsidy rose to 38.7% from 28.8% previously, and new-home prices excluding subsidized transactions fell 0.7%. Over five years, new-home prices have risen 34.5%, compared with 33.7% for all housing. For the first time, the CBS also published a land-for-housing index, showing a 4.9% drop in 2025 versus 2024. Land for dense construction fell 3.9%, and land for detached housing fell 18.1%.