Israel’s consumer price index fell 0.3% in May, beating forecasts

Israel’s consumer price index fell 0.3% in May 2026 from April, a sharper drop than analysts expected, as forecasts had pointed to a decline of 0.1% to 0.2%. Annual inflation stayed unchanged at 1.9%, remaining inside the Bank of Israel’s 1% to 3% target range.

The accompanying housing price index, which is published alongside the CPI but is not part of it, showed apartment prices falling again. Prices for March-April transactions were down 0.3% from February-March, with declines in every district except Tel Aviv and the Central District. New-home prices in the overall market fell 0.1%.

The Central Bureau of Statistics said new-home prices excluding government-subsidized deals fell 0.7%. The article says subsidized sales under programs such as Mechir Lamishtaken, Mechir Matara and Diur Behanchana have continued to push new-home prices up rather than down, repeating the pattern seen in the previous monthly report, when such deals turned a 0.3% decline into a 0.4% rise.

Among CPI components, transportation fell 2.7%, furniture and household equipment fell 0.1%, clothing rose 1.9%, culture and entertainment rose 1.1%, and housing rose 0.6%. Rents increased 2.5% for renewing tenants and 6.8% for new tenants. Analysts said inflation should remain relatively mild, with Bank Hapoalim’s chief markets strategist Mody Shafir forecasting about 1.7% over the next year and 1.9% to 2.0% for 2026, while Leader Capital Markets said market inflation expectations fell to 2.15% from 2.32% because ongoing fighting in the north and concerns about renewed Iranian fire are still restraining consumption.