September Inflation Drops 0.5%, Annual Rate at 1.6%; Housing Prices Fall Sharply
Translated & summarized from Calcalist by baba
Israel's Consumer Price Index fell 0.5% in September 2026, exceeding analyst expectations for a smaller decline. The annual inflation rate rose slightly to 1.6% in the 12 months ending September. Housing prices saw a significant annual drop of 1.8%, marking the longest period of decline in a decade. The inflation data is expected to influence the Bank of Israel's upcoming interest rate decision, with a potential cut that could impact the upcoming election.
The story in 5 lines · by baba
- Israel's Consumer Price Index dropped 0.5% in September 2026, exceeding forecasts.
- Annual inflation in Israel rose to 1.6% in the 12 months ending September.
- Housing prices in Israel decreased by 1.8% over the past year.
- The monthly inflation data is a key factor for the Bank of Israel's interest rate decision.
- A potential interest rate cut could influence public mood before the upcoming election.
Israel's Consumer Price Index (CPI) decreased by 0.5% in September 2026 compared to August 2026, the Central Bureau of Statistics reported Thursday. This decline was steeper than the 0.2%-0.3% drop analysts had predicted. Over the past 12 months, from September 2025 to September 2026, the CPI rose by 1.6%, a slight increase from the 1.5% annual rise recorded in August.
Significant price decreases were observed in culture and entertainment, which fell by 2.7%, and transportation, down 2.5%. Clothing and footwear prices dropped by 0.9%, while food and furniture/home equipment each decreased by 0.4%. Conversely, notable price increases occurred in fresh vegetables, up 6.6%, education services, up 0.8%, and rent, which rose by 0.4%.
The monthly inflation figure is considered positive as it indicates a sharper price decline than anticipated. This data will be a key factor for the Bank of Israel when it makes its next interest rate decision in about ten days. There is a considerable chance the Bank of Israel will lower the interest rate again. Such a move could potentially influence public sentiment ahead of the elections on the 27th, and the current government is likely to leverage this decision in its final election campaign push. The current Bank of Israel interest rate stands at 3.25%.
Furthermore, the report revealed that prices for both new and existing homes fell by 1.8% over the past year, based on transactions from July-August 2026 compared to the same period in 2025. Compared to the preceding two-month period (June-July 2026), apartment prices decreased by 0.6%. This marks the longest period of annual price declines in a decade, with the Central Bureau of Statistics reporting year-over-year drops in 11 of the last 12 months. Annual price decreases were recorded across all districts, with the central region experiencing a sharpest drop of 2.7%, followed by Tel Aviv at 1.9%, the South at 1.5%, Haifa at 1.4%, the North at 0.8%, and Jerusalem at 0.2%. New apartment prices declined by 0.4% annually, with the same rate of decrease observed when comparing July-August 2025 transactions to June-July 2026.
