Israel's August Inflation Hits 0.7%, Driven by Travel and Housing Costs
Israel's Consumer Price Index (CPI) rose by 0.7% in August, bringing the annual inflation rate to 1.5%. The increase was primarily fueled by a 9.0% surge in overseas travel and flights, which contributed significantly to the overall index. Transportation costs also saw a notable rise of 2.7%, with fuel and vehicle maintenance increasing by 7.2%. Housing expenses climbed by 0.6%, with rent prices showing a larger increase for new tenants (4.4%) compared to those renewing leases (2.6%).
Despite the monthly rise, annual inflation remains relatively moderate. The CPI, excluding fruits, vegetables, and energy, rose by 1.5% year-on-year. However, the housing component saw a more significant annual increase of 0.7%. Other notable monthly price hikes included fresh vegetables (2.9%), culture and entertainment (2.0%), and hotels and guesthouses (12.0%). Conversely, fresh fruit prices decreased by 2.0%, and clothing by 0.8%.
In the housing market, the index of apartment prices increased by 0.2% in June-July compared to May-June, indicating a recent stabilization. However, on an annual basis, apartment prices have decreased by 1.2% compared to the same period last year. This trend shows a continued annual decline, although short-term figures suggest a leveling off.
Geographically, price changes varied. Tel Aviv saw a 0.7% increase in apartment prices in June-July, while Jerusalem experienced a 0.4% decrease. Annually, the Central district saw the steepest decline at 3.2%, while Jerusalem and the North recorded modest increases of 1.1% and 1.0% respectively.
New apartment prices rose by 0.5% in June-July compared to the previous two-month period, with government-subsidized deals accounting for a larger share of transactions. However, year-on-year, new apartment prices fell by 0.8%. The secondhand apartment market also showed weakness, with prices dropping 1.2% in the second quarter of 2026 compared to the first quarter, with significant decreases in Jerusalem and Tel Aviv.
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