Israel's Inflation Slows to 1.5% Annually as Housing Prices See Modest Rise

Israel's Consumer Price Index (CPI) rose by 0.7% in August 2026, bringing the annual inflation rate to 1.5%, unchanged from the previous month. This figure remains within the Bank of Israel's target range of 1%-3%. The monthly increase was at the lower end of analysts' expectations. Notable price decreases were observed in fresh fruits (down 2.0%), clothing (down 0.8%), food (down 0.5%), and home furnishings (down 0.3%). Conversely, prices for fresh vegetables surged by 2.9%, transportation costs increased by 2.7%, and culture and entertainment saw a 2.0% rise.

The housing price index registered its second consecutive monthly increase, rising by 0.2% in August. 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%. In a year-over-year comparison, however, overall housing prices decreased by 1.2% in June-July 2026 compared to the same period in 2025, with new apartments down 0.8% annually.

Geographically, the Tel Aviv district experienced the largest monthly housing price increase at 0.7%, followed by the Central district at 0.3%. Other districts saw smaller increases or decreases, including Jerusalem (-0.4%), North (-0.1%), Haifa (-0.3%), and South (0.1%).

For renters, the data indicated a significant rise in rents. Those renewing contracts saw a 2.6% increase, while new tenants faced a 4.4% rise in rent for apartments that changed occupants. The report also included, for the first time, quarterly changes in second-hand apartment prices by district. Overall, second-hand apartment prices fell by 1.2% in the second quarter of the year compared to the first quarter, with notable decreases in Tel Aviv (-2.0%) and the Central district (-1.1%).