Israel's Consumer Price Index Rose 0.7% in August, Housing Prices Up 0.2%

Israel's Consumer Price Index (CPI) saw a monthly increase of 0.7% in August, bringing the annual inflation rate to 1.5%. While the monthly rise was notable, the annual figure suggests a moderate inflation environment. The most significant price hikes in August were in fresh vegetables, up 2.9%, followed by transportation costs at 2.7%, and culture and entertainment at 2.0%. Housing prices rose by 0.6% for the month.

Conversely, several categories experienced price decreases. Fresh fruit prices dropped by 2.0%, clothing by 0.8%, food by 0.5%, and furniture and home equipment by 0.3%. Within the housing sector, rent increases varied significantly between new and renewing tenants. Rent for renewing contracts rose by 2.6%, while for new tenants in apartments with a change of occupancy, rent increased by 4.4%. These figures are approximations of the annual rent change for these groups, as most leases have fixed monthly payments.

The housing market itself showed a different trend, with transaction prices rising 0.2% in June-July compared to May-June. However, year-over-year, housing prices decreased by 1.2% in June-July 2026 compared to the same period in 2025. Regional variations persist, with prices increasing in Tel Aviv (0.7%), the Central District (0.3%), and the South (0.1%), while Jerusalem saw a 0.4% decrease, Haifa 0.3%, and the North 0.1%.

New housing prices increased by 0.5% in the recent period, with government-subsidized transactions accounting for 41.2% of all new home deals, up from 37.8%. Excluding these subsidies, new housing prices rose by 0.4%. Despite this monthly increase, new housing prices are still 0.8% lower year-over-year. Over the past five years, new housing prices have risen 25.2%, compared to a 29.3% increase in overall housing prices.

Data on the second-hand housing market revealed a 1.2% decrease in prices in the second quarter of 2026 compared to the first quarter, with notable drops in Jerusalem (-2.9%) and Tel Aviv (-2.0%). Construction input prices decreased by 0.1% in July, but year-over-year, they rose 3.5%, primarily due to a 5.4% increase in labor costs. Industrial producer prices rose 2.7% in August, largely driven by a 28.3% surge in refined petroleum product prices.