Israel's Inflation Falls to 1.6% Annually, Housing Prices Decline
Translated & summarized from Globes by baba
Israel's annual inflation rate dropped to 1.6% in September 2026, surprising economists and falling below expectations. The Consumer Price Index decreased by 0.5% that month, driven by lower prices in sectors like culture and transportation. Housing prices also declined by 0.6% in July-August 2026, reversing recent small gains and showing a 1.8% year-over-year decrease. Regional variations exist, with the North leading price drops and Haifa being the only district to see an increase.
The story in 7 lines · by baba
- Israel's annual inflation rate fell to 1.6% in September 2026, a better-than-expected outcome.
- The Consumer Price Index decreased by 0.5% in September 2026.
- Housing prices fell by 0.6% in July-August 2026, after two months of slight increases.
- Prices for culture, entertainment, and transportation saw significant monthly decreases.
- Rent increased by 2.4% for renewing tenants and 5.3% for new tenants.
- The Northern District experienced the largest monthly drop in housing prices.
- Overall housing prices are down 1.8% compared to the same period last year.
Israel's Consumer Price Index (CPI) decreased by 0.5% in September 2026 compared to August 2026, bringing the annual inflation rate to 1.6% for the twelve months ending in September 2026. This figure was better than the market consensus, which had predicted a monthly decrease of 0.3%-0.4% and an annual increase of 1.7%-1.8%. Notable price drops were observed in culture and entertainment (down 2.7%), transportation (down 2.5%), clothing and footwear (down 0.9%), and food, furniture, and home equipment (each down 0.4%). Conversely, prices rose for fresh vegetables (up 6.6%), education services (up 0.8%), and rent (up 0.4%). For renters renewing contracts, rent increased by 2.4%, while new renters saw a 5.3% rise.
Following two months of slight increases, housing prices have resumed their downward trend. According to data from the Central Bureau of Statistics, the housing price index, which includes new and used homes, fell by 0.6% in July-August 2026 compared to June-July. This decline follows modest 0.1% increases in the preceding two periods, which themselves came after a 1.2% drop in April-May. Compared to the same period last year, housing prices are down 1.8%.
New housing prices decreased by 0.4% from the previous period, with a sharper 0.8% drop when excluding government-subsidized deals. The proportion of subsidized deals among all new housing transactions increased to 45.8% from 40%. On a regional level, the Northern District saw the largest price drop at 1.5%, followed by Tel Aviv (down 0.9%) and the Central District (down 0.7%). Haifa was the only district to experience a price increase, rising by 0.4%. Annually, all six districts recorded price decreases, with the Central District showing the largest annual drop of 2.7% and Tel Aviv following with a 1.9% decrease.
Over a five-year span, overall housing prices have increased by 26.8% since July-August 2021, while new housing prices have risen by 24.3% in the same period.
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