Israel's Annual Inflation Drops to 1.1%, Housing Prices Decline
Translated & summarized from Al-Shams by baba
Israel's annual inflation rate has decreased to 1.1% in October, the lowest since April 2021, with the CPI falling 0.1% for the month. Housing prices also saw a 0.2% drop between August and September, and the average apartment price declined by 5.7% in the third quarter. Despite these trends, the Bank of Israel is expected to hold interest rates steady at 3.25% due to various economic factors, including currency fluctuations and security spending.
The story in 6 lines · by baba
- Israel's annual inflation rate fell to 1.1% in October, the lowest since April 2021.
- The Consumer Price Index decreased by 0.1% in October, contrary to analyst expectations.
- Housing prices declined by 0.2% between August and September, with a 1.5% annual decrease.
- The average apartment price in Israel dropped 5.7% in the third quarter to 2.286 million shekels.
- The Bank of Israel is expected to maintain its interest rate at 3.25%.
- Factors influencing interest rate decisions include currency depreciation and security spending.
Israel's annual inflation rate has fallen to 1.1%, its lowest point since April 2021, according to data released by the Israel Central Bureau of Statistics on Sunday. The Consumer Price Index (CPI) decreased by 0.1% in October compared to September, defying analyst expectations of a 0.5% rise. The 12-month inflation rate through October stood at 1.1%, down from 1.8% the previous month.
Significant price decreases were observed in fresh fruits (2.8%) and transportation services (1.4%). However, clothing and footwear prices rose by 4.1%, and fresh vegetables by 3.5%. In the rental market, lease renewals saw a 2.8% increase in rent, while new tenants experienced a 5.5% rise.
Concurrently, the housing price index dropped by 0.2% between August and September, marking a 1.5% annual decline. Price variations were noted across regions, with the North and Haifa seeing increases, while the Center and Tel Aviv experienced decreases. Annually, Tel Aviv, the Center, and the South saw price reductions, while Haifa and Jerusalem experienced slight increases.
New apartment prices fell by 0.7% during the period and 0.2% annually. The average apartment price in Israel during the third quarter of 2026 was approximately 2.286 million shekels, a 5.7% decrease from the previous quarter and 1.5% from the same period last year. Tel Aviv recorded the highest average price at around 3.46 million shekels, while the North had the lowest at 1.498 million shekels.
Despite the inflation slowdown, the Bank of Israel is expected to maintain its interest rate at 3.25%, as indicated by its late October decision. Factors influencing this decision include the shekel's depreciation, potential import cost increases, rising travel expenses, anticipated U.S. interest rate hikes, and increased security spending contributing to a wider fiscal deficit. The Bank of Israel's research department forecasts the benchmark interest rate to remain between 3% and 3.25% for the next six months, potentially reaching 3% by the third quarter of 2027.
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