Israel's Inflation Holds Steady at 1.5% Despite Expectations

Israel's Consumer Price Index (CPI) rose by 0.7% in August compared to July, keeping the annual inflation rate steady at 1.5%, contrary to expectations of a significant jump. This data comes from the Central Bureau of Statistics (CBS) released Tuesday.

Notable price increases in August were seen in fresh vegetables (up 2.9%), transportation (up 2.7%), culture and entertainment (up 2.0%), and housing (up 0.6%). Conversely, prices dropped for fresh fruits (down 2.0%), clothing (down 0.8%), food (down 0.5%), and furniture and home equipment (down 0.3%).

Rent prices for contract renewals increased by 2.6%, while new renters saw a larger increase of 4.4%. In the housing market, apartment prices rose by 0.2% between June-July compared to May-June, according to a separate CBS index. Price increases varied by district, with Tel Aviv seeing a 0.7% rise and the Center 0.3%, while prices fell in the North (0.1%), Haifa (0.3%), and Jerusalem (0.4%). Compared to the same period last year, apartment prices decreased by 1.2% in most districts.

The steady inflation follows a gradual moderation in recent months. This trend prompted the Bank of Israel to cut its interest rate by 0.25% earlier in the month, marking the third consecutive reduction, bringing the rate to 3.25%. Bank of Israel Governor Prof. Amir Yaron commented that inflation is below the target, economic activity is more moderate, and third-quarter indicators suggest a slowdown in demand. He also noted that the strong shekel's impact on inflation is not yet fully reflected and that the bank operates amidst significant uncertainty.