Israel's Consumer Prices Rise 0.7% in August, Annual Inflation Holds at 1.5%

Israel's consumer price index (CPI) increased by 0.7% in August compared to July, while the annual inflation rate remained stable at 1.5%. This monthly rise was within the lower range of analysts' expectations. The Central Bureau of Statistics reported that the most significant monthly price increases were seen in fresh vegetables (2.9%), transportation (2.7%), and culture and entertainment (2%). Housing costs also rose by 0.6% in the CPI.

Conversely, prices for fresh fruits dropped by 2%, clothing by 0.8%, food products by 0.5%, and furniture and household equipment by 0.3%. Rent costs continued to pressure households, with a 2.6% increase for renewing tenants and a 4.4% rise for new tenants in apartments that changed occupants.

Separately, the housing price index showed a 0.2% increase in transactions during June and July compared to the preceding two months, marking the second consecutive month of rising apartment prices. This monthly increase was primarily driven by the Tel Aviv and Central regions, with prices up 0.7% and 0.3% respectively. Prices in Jerusalem fell by 0.4%, Haifa by 0.3%, and the North by 0.1%.

New apartments saw a higher increase of 0.5%, partly due to government-subsidized sales. Excluding these subsidized deals, new apartment prices rose by 0.4%. On an annual basis, however, the housing price index decreased by 1.2% in June-July 2026 compared to the same period last year. New apartments saw an annual drop of 0.8%.

These figures come after a period of gradual inflation decline, prompting the Bank of Israel to cut its interest rate by 0.25 percentage points for the third consecutive time to 3.25%. Bank of Israel Governor Amir Yaron noted that inflation is below the midpoint of the target range and economic activity is moderating, with demand showing signs of easing in the third quarter. He also stated the central bank operates in an environment of high uncertainty.