Israel's Annual Inflation Drops to 1.1%, Housing Prices Continue to Fall
Translated & summarized from Mako by baba
Israel's annual inflation has decreased to 1.1% after the CPI fell 0.1% in October 2026, below expectations. Housing prices have also continued their decline, marking the longest annual drop in a decade, with prices falling 1.5% year-over-year. The central bank may consider lowering interest rates due to the low inflation. The average apartment price in Q3 2026 was NIS 2.29 million.
The story in 5 lines · by baba
- Annual inflation in Israel has fallen to 1.1% as of October 2026.
- Housing prices are experiencing the longest annual decline in the past decade.
- The CPI decreased by 0.1% in October 2026, contrary to analyst expectations.
- The Bank of Israel may consider lowering interest rates due to low inflation.
- The average apartment price in Q3 2026 was NIS 2.29 million, down 1.5% annually.
Israel's annual inflation has fallen to 1.1%, with the Consumer Price Index (CPI) decreasing by 0.1% in October 2026 compared to the previous month, defying analyst expectations of modest increases. This annual inflation rate is at the lower end of the Bank of Israel's target range of 1%-3%, potentially prompting the central bank to consider lowering interest rates at its upcoming meeting. This follows the Monetary Committee's decision to hold rates steady in their previous meeting, held a week before elections.
Concurrently, housing prices are experiencing the longest period of annual decline in the last decade. The current price drops have surpassed two previous periods of annual decreases: one in 2018 lasting three quarters, and another in the latter half of 2023. Notable price decreases were observed in fresh fruits (down 2.8%), transportation (down 1.4%), and owner-occupied housing services (down 0.5%). Conversely, significant price increases were seen in clothing and footwear (up 4.1%), fresh vegetables (up 3.5%), apartment maintenance (up 0.4%), and home furnishings (up 0.3%). Rental prices saw an increase of 2.8% for tenants renewing contracts and a 5.5% rise for new tenants.
Examining housing transactions from August-September 2026 compared to July-August 2026, apartment prices fell by 0.2%, with new apartments seeing a 0.7% decrease. This decline remains consistent even when excluding government-subsidized housing deals. On a yearly basis, comparing August-September 2026 to August-September 2025, the annual housing price index dropped by 1.5%, and new apartment prices decreased by 0.2%. This marks the longest stretch of annual price declines in a decade. The average price of an apartment in Israel during the third quarter of 2026 was NIS 2.29 million, a 5.7% decrease from the previous quarter and a 1.5% drop from the same quarter last year.
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