Israel's June Inflation Stable as Housing Prices Drop Sharply Nationwide

Israel's Consumer Price Index (CPI) for June 2026 remained unchanged compared to May, with annual inflation moderate at 1.6% over the past 12 months, the Central Bureau of Statistics reported. The overall stability in the CPI masks divergent trends across sectors: culture and entertainment prices rose by 1.0%, housing costs (including rent and maintenance) increased by 0.7%, health by 0.6%, and food by 0.4%. Conversely, fresh vegetables and fruits prices plunged 5.2%, clothing and footwear fell 2.7%, transportation dropped 0.7%, and home furniture and equipment declined 0.5%.

The housing market continues to cool significantly. Comparing transactions from April-May 2026 to March-April 2026, general housing prices (new and resale) fell by 1.0%, and on an annual basis, prices declined by 2.0%. This marks the third annual price drop in the past decade, following similar declines in 2018 and late 2023. Regionally, the largest monthly price decreases occurred in major metropolitan areas: Tel Aviv fell 2.3%, Jerusalem 1.8%, Haifa 0.5%, and the Northern District 0.3%, while Central and Southern districts remained stable. Year-over-year, Central, Haifa, Tel Aviv, and Southern districts saw price declines, whereas the Northern and Jerusalem districts experienced slight increases.

New home prices dipped slightly by 0.1% monthly but dropped 3.9% annually. Government-subsidized transactions rose to 37.5% from 34.6%, and excluding these, new home prices actually increased by 0.2%. Despite recent declines, housing prices have surged over the past five years, with new homes up 29.9% and overall housing prices up 31.2% since April-May 2021.

Meanwhile, rental prices are rising sharply. New tenants faced a 6.6% rent increase, and renewing tenants saw a 2.6% rise, reflecting a challenging rental market despite falling purchase prices. Construction input costs rose 3.7% annually, driven mainly by a 5.5% increase in labor wages. Material costs showed mixed trends, with notable price hikes in sewage and water systems but declines in metalwork and concrete prices. Industrial producer prices fell 0.8% in June, mainly due to sharp drops in refined petroleum and clothing products, though excluding fuels, prices rose 0.3%. Mining and quarrying prices declined 1.0% in June, completing an 8.8% annual drop.