Israel's August Inflation Rises 0.7%, Annual Rate Holds at 1.5%

Israel's Consumer Price Index (CPI) increased 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% rise for the month. Significant price increases were observed in fresh vegetables (2.9%), transportation (2.7%), culture and entertainment (2%), and housing (0.6%). Conversely, notable price decreases occurred in fresh fruits (-2%), clothing (-0.8%), and home furnishings (-0.3%).

Rent prices saw a 2.6% increase for contract renewals and a 4.4% rise for new tenants. The input price index for residential construction decreased by 0.1% in July, reaching 103.5 points. Year-to-date, this index has risen by 2.3%.

In parallel, the CBS reported that apartment prices, encompassing both new and secondhand units, rose by 0.2% in June-July compared to May-June. However, on an annual basis, apartment prices dropped by 1.2% in June-July of this year compared to the same period in 2025. Regional variations were observed, with prices falling in Jerusalem (-0.4%), the North (-0.1%), and Haifa (-0.3%), while rising in the Center (0.3%), Tel Aviv (0.7%), and the South (0.1%).

Annually, the Central, Haifa, Tel Aviv, and Southern districts experienced price declines, while Jerusalem and the North saw increases. New apartment prices rose 0.5% in June-July compared to the previous two-month period. The proportion of government-subsidized transactions, primarily through the "Price for the Resident" program, increased to 41.2% from 37.8%, suggesting that the overall price increase was partly influenced by subsidies rather than solely market dynamics. Excluding subsidized deals, new apartment prices rose by a more modest 0.4%. Over the past five years, new apartment prices have increased by 25.2%, lagging behind the general CPI's 29.3% rise.

For the first time, the CBS also released a separate quarterly index for secondhand apartment prices, which showed a 1.2% decrease in the second quarter compared to the first. The sharpest decline was in Jerusalem (-2.9%), followed by Tel Aviv (-2.0%) and the Center (-1.1%). Slight increases were noted in the South (0.3%), North (0.1%), and Haifa (0.1%).