Israel's Inflation Slows to 1.1% in October, Lowest Since April 2021
Translated & summarized from Vesty by baba
Israel's annual inflation rate fell to 1.1% in October 2026, the lowest since April 2021, with prices for fresh fruit and transportation decreasing. However, clothing and vegetable prices rose, and rental costs increased for new tenants. The Bank of Israel maintained its interest rate at 3.25%, but a weakening shekel may drive up import costs. Apartment prices nationwide decreased by 1.5% year-over-year, with the average price of a home at 2.286 million shekels in Q3 2026.
The story in 6 lines · by baba
- Israel's annual inflation rate dropped to 1.1% in October 2026, the lowest since April 2021.
- Fresh fruit prices fell 2.8% and transportation costs decreased 1.4% in October.
- Rental prices rose 5.5% for apartments with new tenants, but were fixed for most existing renters.
- The Bank of Israel's interest rate remains at 3.25% after three consecutive cuts.
- Apartment prices nationwide decreased by 1.5% year-over-year, averaging 2.286 million shekels.
- A weakening shekel could increase import costs and impact prices for holidays like Hanukkah.
Israel's annual inflation rate in October 2026 dropped to 1.1%, the lowest figure recorded since April 2021, when it stood at 0.8%. The consumer price index also saw a monthly decrease of 0.1% in October. This slowdown was primarily driven by a 2.8% drop in fresh fruit prices and a 1.4% decrease in transportation costs. Housing services for apartment owners also became cheaper, falling by 0.5%. Conversely, clothing and footwear prices rose by 4.1%, and fresh vegetables increased by 3.5%.
Rental prices showed a mixed trend. When lease agreements are renewed, rent increased by 2.8%, but for apartments with a change of tenant, the rise was steeper at 5.5%. Most tenants, however, have fixed rental rates without indexation. The Bank of Israel has lowered its benchmark interest rate three times consecutively, most recently leaving it at 3.25% in late October 2026. Despite this, the weakening shekel, potentially exacerbated by a Federal Reserve rate hike in the U.S. and Israel's budget deficit, could lead to increased import costs and upward pressure on prices, particularly for airfare and holidays around Hanukkah.
In the housing market, apartment prices have declined. The housing price index fell by 0.2% in August-September 2026 compared to the previous two-month period and by 1.5% year-over-year. Most districts saw price decreases, with the Tel Aviv district experiencing a 2.1% drop over the year. New apartments also became cheaper, down 0.7% in the period and 0.2% annually. The average price of a sold apartment nationwide in the third quarter of 2026 was 2.286 million shekels, a 1.5% decrease from the previous year. Tel Aviv remained the most expensive district with an average price of 3.460 million shekels, while the Northern district was the least expensive at 1.498 million shekels.
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