Israel’s consumer price index falls 0.3% in May, annual inflation eases to 1.9%

Israel’s consumer price index fell 0.3% in May 2026 compared with April, pushing the 12-month inflation rate down to 1.9% from a year earlier. The sharpest monthly declines were in transport, down 2.7%, and furniture and home equipment, down 0.1%, while fresh fruit prices swung sharply, with some items falling 4.9% and others rising 6.7%.

Other notable monthly increases came in clothing, up 1.9%, culture and entertainment, up 1.1%, and housing, up 0.6%. In rental housing, tenants who renewed leases saw rents rise 2.5%, while new tenants, those replacing previous renters, faced a 6.8% jump. The report noted these figures approximate annual change for those groups because most tenants are on fixed contracts without index-linked adjustments.

The residential construction input index rose 0.6% in May to 103.4 points, up 2.2% since the start of 2026 and 3.5% over 12 months. Wage costs in construction were a major driver, rising 5.3% over the year and 1.1% in May alone. Building materials and products rose 0.3% monthly, led by ready-mix concrete, sewage and drainage systems, and protected-space products, while some concrete products, construction steel, and nets and cages became cheaper.

Producer prices also moved lower. The industrial output price index for domestic markets fell 1.5% to 122.7 points in May, led by refined petroleum products, textiles, computers and optical equipment, and food, while rubber and plastic products and wood products rose. Excluding fuels, the index fell 0.5% in May, but was still up 1.2% over 12 months. Quarrying and mining prices fell 2.4% in May and 8.8% annually. Separately, first-quarter 2026 services data showed higher prices for cleaning, advertising, employment, accounting and legal services, while management consulting and computer programming and consulting fell.

Home prices, which are not included in the consumer price index, continued to decline. Transactions in March-April 2026 versus February-March 2026 showed a 0.3% drop in overall housing prices and a 0.1% fall in new apartments. By region, prices fell in Jerusalem, Haifa, the South and slightly in the North, but rose in Tel Aviv and the Center. On an annual basis, housing prices were down 1.3%, with the steepest declines in the Center and Tel Aviv; new apartment prices fell 3.9%. Land prices nationwide also fell 4.9% in 2025 versus 2024.