Israel's Annual Inflation Drops to 1.1%, Housing Prices Continue Decline
Translated & summarized from N12 by baba
Israel's annual inflation has dropped to 1.1%, the lowest point in the Bank of Israel's target range, potentially leading to an interest rate cut. Housing prices have also continued their decline, marking the longest annual drop in a decade. In October 2026, the CPI fell 0.1%, while housing prices decreased by 0.2% month-over-month and 1.5% year-over-year. Significant price drops were observed in fruits and transportation, while clothing and vegetables saw increases.
The story in 6 lines · by baba
- Annual inflation in Israel has fallen to 1.1%, the lowest in a decade.
- Housing prices are experiencing the longest annual decline in ten years.
- The consumer price index decreased by 0.1% in October 2026.
- The central bank may consider lowering interest rates due to low inflation.
- Rent prices increased for both renewing and new tenants.
- Tel Aviv and Central Israel saw the largest annual housing price drops.
Israel's annual inflation has fallen to 1.1%, reaching the lower end of the Bank of Israel's target range of 1%-3%. This development, following a 0.1% decrease in the consumer price index (CPI) in October 2026 compared to September, could prompt the central bank to consider lowering interest rates at its upcoming meeting. Analysts had anticipated modest increases, making the actual decline unexpected. The current inflation rate is at the bottom of the target range, potentially influencing the Bank of Israel's monetary policy decisions.
Concurrently, housing prices are experiencing the longest period of annual decline in the last decade. The current downward trend in property values surpasses two previous periods of annual decreases observed in 2018 and the latter half of 2023. In August-September 2026, housing prices fell by 0.2% compared to July-August 2026, with new homes seeing a 0.7% decrease. Annually, from August-September 2025 to August-September 2026, the housing price index dropped by 1.5%, and new homes by 0.2%.
Notable price decreases in October included fresh fruits (2.8%), transportation (1.4%), and owner-occupied housing services (0.5%). Conversely, significant price increases were seen in clothing and footwear (4.1%), fresh vegetables (3.5%), apartment maintenance (0.4%), and furniture and home equipment (0.3%). Rent prices rose by 2.8% for lease renewals and 5.5% for new tenants.
Regional price changes in August-September 2026 compared to the previous year showed decreases in Tel Aviv (2.1%), the Center (2.0%), the South (1.6%), and the North (0.3%), with Jerusalem remaining stable (0.1% decrease) and Haifa seeing a slight increase (0.3%). The average price of an apartment in Israel during the third quarter of 2026 was 2.29 million shekels, a 5.7% decrease from the previous quarter and a 1.5% decrease year-over-year.
