Consumer Prices Rise Slightly in July as Inflation Remains Low, Housing Costs Increase Moderately

In July 2026, Israel's Consumer Price Index (CPI) rose by 0.3%, slightly exceeding forecasts of a 0.2% increase. The annual inflation rate remained low at 1.5%, about half a percentage point below the Bank of Israel's target midpoint. Key contributors to the monthly price increases included transportation, which rose by 1.4%, culture and entertainment by 1.1%, and housing by 0.7%. Conversely, prices for clothing and footwear dropped by 4.6%, fresh fruits and vegetables fell by 3.5%, furniture and home equipment decreased by 0.7%, and miscellaneous items declined by 0.4%. The overall impact on the CPI depends on each category's weight in the index, meaning moderate changes in major sectors can influence the total more than sharp changes in smaller ones.

In the rental market, tenants renewing leases saw an average rent increase of 2.6%, while new tenants experienced a higher rise of 4.7%, reflecting annual trends since most rents remain fixed during contract periods. Regional price changes showed increases in Jerusalem (1.8%), Haifa (1.5%), the North (0.9%), and the South (0.7%), while prices declined in the Central District by 1.0% and in Tel Aviv by 0.7%. On an annual basis, the Central District saw the steepest price drop of 4.1%, whereas Jerusalem and the North recorded increases of 1.8% and 1.6%, respectively.

New apartment prices also rose moderately by 0.5% compared to the previous period, or 0.9% excluding government-subsidized transactions under the "Price for the Resident" program. However, year-over-year, new apartment prices remain 2.0% lower. The average transaction price in the second quarter of 2026 was approximately 2.435 million shekels, marking a 3.7% increase from the previous quarter and a 7.9% rise compared to the same quarter last year.