Israel's Consumer Price Index Rises 0.3% in July 2026 Amid Ongoing Rent Increases

Israel's Consumer Price Index (CPI) increased by 0.3% in July 2026 compared to June, resulting in an annual inflation rate of 1.5% over the past 12 months. The monthly fluctuations were mainly driven by seasonal factors and price hikes in transportation and leisure sectors, alongside a continued rise in housing costs. Transportation prices rose by 1.4%, and culture and entertainment increased by 1.1%, influenced by the summer season. Conversely, clothing and footwear prices fell by 4.6%, fresh fruits and vegetables dropped by 3.5%, and moderate declines were seen in furniture and miscellaneous items.

Rental prices continued to climb, with tenants renewing existing leases facing a 2.6% increase, while new tenants experienced a sharper 4.7% rise. The Central Bureau of Statistics noted these changes approximate the annual rent adjustments, as most leases remain fixed during their term. In the industrial sector, the domestic industrial output price index fell by 1.2% in July, mainly due to a 12% plunge in refined petroleum prices and decreases in basic metals and furniture prices. Excluding fuel, the index was stable monthly but declined 0.5% annually.

The housing market, excluded from the CPI, showed slight activity with a 0.1% increase in the general housing price index and a 0.5% rise in new home prices between May and June 2026 compared to April-May. Regional trends varied, with notable price 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. Year-over-year, housing prices dropped 1.5%, and new home prices fell 2.0%, mainly due to decreases in central regions, Tel Aviv, and Haifa. However, the average nationwide transaction price in Q2 2026 was about 2.435 million shekels, up 7.9% from the same quarter last year.

New home prices rose 0.5% from May to June 2026, with government-subsidized transactions increasing to 38.4% of sales. Excluding these, new home prices increased by 0.9%. Over five years, new home prices rose 26.2%, compared to a 30.6% increase in all housing prices. Among major cities, Tel Aviv had the highest average home price at 4.55 million shekels, and Beersheba the lowest at 1.24 million. The largest annual price increases were in Ashdod (11.0%) and Tel Aviv (8.4%), while Ashkelon, Bnei Brak, and Netanya experienced the most significant declines.