Israel's Consumer Price Index Falls Unexpectedly, Annual Inflation at 1.1%
Translated & summarized from Arutz Sheva by baba
Israel's Consumer Price Index unexpectedly fell by 0.1% in October, lowering the annual inflation rate to 1.1%. While fresh produce and transportation costs decreased, clothing and fresh vegetables became more expensive. The rental market saw significant price increases for new tenants, contrasting with a general decline in housing sale prices across most regions. The construction input price index continued to rise, driven by increased labor costs.
The story in 6 lines · by baba
- Israel's Consumer Price Index fell 0.1% in October, with annual inflation at 1.1%.
- Rental prices increased significantly for new tenants, up 5.5% in some cases.
- Housing sale prices dropped 0.2% in August-September, with Tel Aviv seeing the largest decline.
- Annual housing prices are down 1.5%, with Tel Aviv experiencing a 2.1% decrease.
- Construction input prices rose 0.4% in October, driven by labor costs.
- Industrial producer prices surged 1.9% in October, led by refined petroleum products.
Israel's Consumer Price Index (CPI) saw a surprising decrease of 0.1% in October, bringing the annual inflation rate down to 1.1%, according to data released by the Central Bureau of Statistics. This marks a positive deviation from forecasts.
The decline in the general index was influenced by a 2.8% drop in fresh fruit prices and a 1.4% decrease in transportation costs. Housing services also saw a slight reduction of 0.5%. However, notable price increases were observed in clothing and footwear, which rose by 4.1%, and fresh vegetables, up 3.5%. Home maintenance costs increased by 0.4%, and furniture prices rose by 0.3%.
Despite the overall CPI decrease, the rental market continues to experience price hikes, particularly for tenants moving into new apartments. Rent increases for those renewing contracts averaged 2.8%, while new tenants in apartments that changed occupants saw an average rise of 5.5%. The Bureau clarified that these figures represent approximate annual changes for each group, not monthly increases, as most rental agreements maintain fixed prices throughout their term.
In parallel, the housing market continues to see a decline in sale prices. The housing price index, separate from the CPI, fell by 0.2% in August-September 2026 compared to July-August. Tel Aviv experienced the sharpest drop at 0.8%, followed by the South (0.6%) and the Center (0.2%). Conversely, prices rose in Haifa (0.8%) and the North (0.4%), while Jerusalem remained stable. New home prices decreased by 0.7% during the same period.
Year-over-year, housing prices are down 1.5% in August-September 2026 compared to the previous year. Tel Aviv again led the decline with a 2.1% drop, followed by the Center (2%), South (1.6%), and North (0.3%). Jerusalem saw a minor 0.1% decrease, while Haifa was the only district with a 0.3% annual increase. The average price of a home in Israel in the third quarter of 2026 was approximately NIS 2.287 million, a 1.5% decrease from NIS 2.320 million in the same quarter last year.
Meanwhile, the construction input price index continued its upward trend, rising 0.4% in October to 104.4 points. Year-to-date, this index has increased by 3.2%, and by 3.9% over the past 12 months. This annual rise is attributed to a 5.2% increase in labor costs in the construction sector. In October, labor costs rose 0.5%, while material prices increased by 0.1%. Notable material price hikes included blocks (2.1%), mesh and cages (1.3%), and construction iron (1.2%).
In the industrial sector, the producer price index for domestic output rose sharply by 1.9% in October compared to September. Over the last 12 months, this index has increased by 5.1%, though excluding fuels, the rise is only 0.9%. The most significant price jump in October was in refined petroleum products, soaring 16.5%, followed by basic metals at 1.5%. Conversely, textiles and apparel prices decreased by 2% and 1.2% respectively.