August Inflation Rises 0.7%, Annual Rate Holds Steady at 1.5%

Israel's Consumer Price Index (CPI) rose by 0.7% in August, a figure slightly lower than anticipated but still marking a notable increase. The annual inflation rate remained unchanged at 1.5%, mirroring the similar rise recorded in August of the previous year. This stability in the annual rate leads economists to predict that the Bank of Israel will likely refrain from raising its benchmark interest rate for the fourth consecutive time when it convenes on October 21.

Significant price increases were observed in fresh vegetables (up 2.9%), transportation (up 2.7%), culture and entertainment (up 2.0%), and housing (up 0.6%). Conversely, notable price decreases were seen in fresh fruits (down 2.0%), clothing (down 0.8%), food (down 0.5%), and furniture and home equipment (down 0.3%). The report also highlighted sharp increases in airfare, hotels, and fuel, contrasted by a significant drop in car insurance prices.

Rental prices saw a 2.6% increase for tenants renewing their contracts and a 4.4% rise for new tenants in apartments with a change of occupancy. These figures are presented as approximations of the annual change in rent, as most tenants' rents remain fixed under contract for the year.

Separately, the Central Bureau of Statistics reported that apartment prices increased by 0.2% in June-July 2026 compared to May-June 2026. However, when compared to the same period last year (June-July 2025), apartment prices have decreased by 1.2%. New apartment prices rose 0.5% in June-July compared to May-June, with government-subsidized deals making up a larger portion of new apartment transactions. Used apartment prices, reported for the first time, fell by 1.2% in the second quarter of 2026 compared to the first quarter.