Israel's August Inflation Hits 0.7%, Annual Rate Steady at 1.5%

Israel's Consumer Price Index (CPI) rose by 0.7% in August, bringing the annual inflation rate to 1.5%, according to data released by the Central Bureau of Statistics (CBS). Analysts had predicted a 0.9% increase for the month. The rise was driven by significant price hikes in fresh vegetables (2.9%), transportation (2.7%), culture and entertainment (2%), and housing (0.6%). Conversely, prices fell for fresh fruits (2%), clothing (0.8%), and home furnishings (0.3%).

Separately, the CBS reported on housing prices, which are not included in the CPI. In June-July, overall housing prices (new and secondhand) increased by 0.2% compared to May-June. However, on an annual basis, housing prices from June-July of this year decreased by 1.2% compared to the same period in 2025.

Regional housing price data showed mixed trends. In June-July, prices fell in Jerusalem (0.4%), the North (0.1%), and Haifa (0.3%), while rising in the Central region (0.3%), Tel Aviv (0.7%), and the South (0.1%). Annually, prices dropped in the Central (3.2%), Haifa (2.4%), Tel Aviv (0.9%), and Southern (0.6%) regions, with increases noted only in Jerusalem (1.1%) and the North (1.0%).

New housing prices rose 0.5% in June-July compared to the previous two-month period. The proportion of government-subsidized housing deals, primarily from the "Price for the Dwellers" program, increased from 37.8% to 41.2%. Excluding these subsidized deals, new housing prices rose by only 0.4%, suggesting the overall increase is partly due to subsidies rather than solely market appreciation. Annually, new housing prices declined by 0.8%. Over the past five years, new housing prices have risen 25.2%, lagging behind the 29.3% increase in the overall housing index (including secondhand homes).

For the first time, the CBS also released a separate quarterly index for secondhand housing prices. This index showed a 1.2% decrease in secondhand housing prices in the second quarter compared to the first quarter. Jerusalem saw the steepest decline at 2.9%, followed by Tel Aviv (2.0%) and the Central region (1.1%). Slight increases were observed in the South (0.3%), North (0.1%), and Haifa (0.1%).