Israel's Consumer Prices Rise, Housing Market Shows Upward Trend

Israel's Consumer Price Index (CPI) for August 2026 saw a 0.7% increase, falling within analysts' lower expectations. This brings the annual inflation rate to 1.5%, unchanged from the previous month and remaining close to the Bank of Israel's target range of 1%-3%. Significant price drops were observed in fresh fruits (down 2.0%), clothing (down 0.8%), food (down 0.5%), and home furnishings (down 0.3%). Conversely, notable price hikes occurred in fresh vegetables (up 2.9%), transportation (up 2.7%), and culture and entertainment (up 2.0%).

The housing market is showing a second consecutive month of rising prices, with a 0.2% increase in the housing price index for June-July 2026 compared to May-June 2026. This rise was primarily driven by the Tel Aviv and Central districts. New apartments, particularly those under government subsidy programs like "Price for the Target" and "Apartment for the Resident," saw a 0.5% increase, while those excluding subsidies rose by 0.4%.

Geographically, the Central district saw a 0.3% rise in housing prices, and Tel Aviv experienced a 0.7% increase. Other districts showed mixed results: Jerusalem down 0.4%, North down 0.1%, Haifa down 0.3%, and South up 0.1%.

On an annual basis, however, the housing price index decreased by 1.2% in June-July 2026 compared to the same period in 2025. New apartment prices dropped 0.8% year-over-year. Used apartment prices fell 1.2% in the second quarter of 2026 compared to the first quarter, with significant drops in Tel Aviv (2.0%) and the Central district (1.1%).