Israel's Consumer Price Index Rises 0.7% in August; Housing Prices See Annual Decline

Israel's Consumer Price Index (CPI) increased by 0.7% in August 2026 compared to July 2026, according to data released by the Central Bureau of Statistics. The annual inflation rate over the past twelve months remained stable at 1.5%. Significant price increases were observed in fresh vegetables (2.9%), transportation (2.7%), and culture and entertainment (2.0%), while fresh fruit prices dropped by 2.0%, and clothing by 0.8%.

Rental prices saw a notable increase, with a 2.6% rise for lease renewals and a substantial 4.4% jump for new tenants. In the housing market, a two-month comparison (June-July 2026 versus May-June 2026) indicated a modest 0.2% increase in transaction prices. However, on an annual basis, the national housing price index recorded a 1.2% decrease compared to June-July 2025, continuing a trend of annual declines seen in recent years.

Regional analysis for June-July 2026 showed Tel Aviv leading short-term price increases with a 0.7% monthly rise, while Jerusalem, Haifa, and the North experienced slight decreases. Annually, the Central district saw the sharpest price drop of 3.2%, followed by Haifa (2.4%), Tel Aviv (0.9%), and the South (0.6%). Conversely, Jerusalem and the North demonstrated resilience with annual price increases of 1.1% and 1.0%, respectively.

New apartment prices rose by 0.5% in the short term, with government-subsidized deals accounting for 41.2% of new apartment sales. Annually, new apartment prices also declined by 0.8%. Over the last five years, new apartment prices have cumulatively risen by 25.2%, a slower pace than the overall housing market's 29.3% increase.

In other economic indicators, construction input prices decreased by 0.1% in July 2026, though they rose 3.5% over the preceding twelve months, largely due to a 5.4% increase in labor costs. Industrial output prices for domestic destinations surged by 2.7% in August 2026, driven by a significant rise in refined petroleum product prices. Service prices saw mixed trends, with notable increases in cleaning, accounting, and employment services, while legal and programming services experienced price drops.