October Inflation Rate Falls Unexpectedly, Annual Inflation Slows to 1.1%
Translated & summarized from Globes by baba
Israel's Consumer Price Index unexpectedly fell by 0.1% in October 2026, bringing the annual inflation rate down to 1.1%, the lowest since August 2021. This occurred amid a weakening shekel and rising bond yields ahead of the Bank of Israel's interest rate decision. While fresh produce and transportation costs decreased, clothing and footwear prices rose significantly. The housing price index continued to decline, though rental costs for new tenants increased sharply.
The story in 7 lines · by baba
- October's Consumer Price Index fell 0.1%, with annual inflation slowing to 1.1%.
- This marks the lowest inflation rate since August 2021.
- The shekel weakened to approximately 3.2 per dollar.
- Ten-year government bond yields rose to about 4.183%.
- Fresh fruit prices dropped 2.8%, while clothing and footwear prices rose 4.1%.
- New rental agreements saw a 5.5% increase in rent.
- The housing price index decreased by 0.2% in the latest comparison.
Israel's Consumer Price Index (CPI) for October 2026 saw a surprising decrease of 0.1% compared to September, marking the lowest price pressure since August 2021. Over the past twelve months, the annual inflation rate has moderated to just 1.1%. This data emerges amidst a volatile macroeconomic environment, characterized by a weakening shekel, now trading around 3.2 shekels to the dollar, and rising ten-year government bond yields nearing 4.183%. The Bank of Israel's upcoming interest rate decision on November 23rd is anticipated with heightened market sensitivity.
Examining the components of the index, notable price drops were recorded in fresh fruits (-2.8%), transportation (-1.4%), and owner-occupied housing services (-0.5%). Conversely, significant price increases were observed in clothing and footwear (+4.1%), driven by the transition to winter season, fresh vegetables (+3.5%), home maintenance (+0.4%), and home furnishings (+0.3%).
In the real estate and rental market, data from the Central Bureau of Statistics (CBS) presents a mixed picture. Renters renewing their contracts experienced a consistent increase of 2.8%, while new tenants saw a substantial jump of 5.5%. The CBS clarified that these figures approximate annual changes, as most renters are shielded from monthly fluctuations due to existing contracts without indexation clauses.
Meanwhile, the housing price index, separate from the CPI, continued its downward trend. Comparing August-September 2026 transactions to July-August 2026, prices fell by 0.2%, with new homes declining by 0.7%. Annually, the housing price index dropped 1.5%, with the average national price in the third quarter at approximately 2.287 million shekels, down from 2.320 million shekels in the same period last year. Additionally, the input price index for residential construction rose 0.4% in October and 3.9% annually, largely due to a 5.2% increase in labor wages. The industrial output index for domestic destinations surged 1.9%, influenced by a 16.5% jump in refined petroleum product prices.
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