Israel's Consumer Price Index Rises Moderately in July Amid Mixed Housing Market Trends

The Israeli Central Bureau of Statistics released the consumer price index (CPI) data for July 2026, showing a modest 1.5% increase over the past twelve months compared to July 2025. Key price rises were recorded in transportation (up 1.4%), culture and entertainment (up 1.1%), and housing (up 0.7%). Significant price drops helped temper inflation, with clothing and footwear prices falling by 4.6%, fresh fruits and vegetables by 3.5%, furniture and home equipment by 0.7%, and miscellaneous items by 0.4%.

Despite tenant protections against rent fluctuations during lease terms, rents increased notably at contract renewal and turnover points: renewing tenants faced a 2.6% rent increase, while new tenants experienced a 4.7% jump. The housing market, not included in the CPI, showed mixed results in monthly and annual analyses. From May-June 2026 compared to April-May 2026, housing prices rose slightly by 0.1%, with regional increases in Jerusalem (1.8%), Haifa (1.5%), the north (0.9%), and the south (0.7%), while the central district and Tel Aviv saw declines of 1.0% and 0.7%, respectively. New home prices increased by 0.5% monthly.

Year-on-year, the general housing price index fell by 1.5%, and new housing prices dropped by 2.0%. The largest annual declines were in the central district (4.1%), Haifa (1.8%), and Tel Aviv (1.7%), whereas Jerusalem (1.8%), the north (1.6%), and the south (0.1%) experienced price rises. The average national home price in Q2 2026 was 2.435 million shekels, marking a 7.9% increase from the same quarter in 2025.

Residential construction input costs slightly decreased by 0.1% in July to 103.5 points but rose 3.5% over the past year, mainly due to a 5.4% surge in labor costs. Industrial output prices for local destinations dropped 1.2% in July, driven by a 12% fall in refined petroleum product prices, with a 0.5% annual decline. The mining and quarrying index also saw a sharp annual decrease of 5.4%.