Israel's Consumer Price Index Holds Steady in June as Housing Prices Continue to Fall

Israel's Consumer Price Index (CPI) for June 2026 remained unchanged from May, according to the Central Bureau of Statistics, marking a surprise stability in inflation. The annual inflation rate dropped to 1.6%, below the Bank of Israel's 2% target midpoint, signaling a moderate inflation environment.

Price increases were notable in culture and entertainment (1.0%), housing (0.7%), health (0.6%), and food (0.4%). Conversely, significant price declines occurred in fresh fruits and vegetables (5.2%), clothing and footwear (2.7%), transportation (0.7%), and home furniture and equipment (0.5%).

The rental market showed mixed trends: tenants renewing leases faced a 2.6% rent increase on average, while new renters experienced a sharper 6.6% jump, highlighting ongoing pressure despite overall inflation easing. Construction input costs rose slightly by 0.2% in June, with a 2.4% increase since the start of the year and 3.7% over the past 12 months, mainly due to a 5.5% rise in labor costs.

Housing prices continued their downward trend, falling 1.0% between March-April and April-May transactions. The steepest declines were in Tel Aviv (2.3%) and Jerusalem (1.8%), with no change in central and southern regions. Year-over-year, housing prices dropped 2.0%, and new home prices fell 3.9%, especially in central districts, Haifa, Tel Aviv, and the south, while northern and Jerusalem areas saw moderate increases.

These figures come shortly after the Bank of Israel cut interest rates to 3.5%, reflecting expectations of sustained moderate inflation. The June CPI data reinforce the view that price pressures in the economy are easing, though housing and rental markets still show localized price increases.