Israel's inflation rate falls to 1.5%

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Israel’s Consumer Price Index rose by 0.3% in July in comparison with June, the Central Bureau of Statistics announced today. The reading is in line with analysts’ forecasts of a rise of 0.2-0.3%. For the twelve months to the end of July, the rate of inflation was 1.5%, down from 1.6% in the twelve months to the end of June, and well within the Bank of Israel’s 1-3% target rate.

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There were notable rises in July in the transport item, which rose 1.4%, culture and entertainment, which rose 1.1%, and housing, which rose 0.7%. There were sharp falls in clothing and footwear (-4.6%), fresh produce (-3.5%) and furniture and home equipment (-0.7%).

The Residential Building Input Price Index fell by 0.1% in July. In the twelve months to the end of July, it rose by 3.5%, mainly because of a 5.4% rise in wages for workers in the industry. For 2026 to date, the index is up 2.6%.

The Home Price Index (which is not part of the general CPI) rose by just 0.1% between April-May 2026 and May-June 2026. For the twelve months to the end of June 2026, the index fell by 1.5%.

In Jerusalem, the Home Price Index rose by 1.8% between April-May 2026 and May-June 2026, and in Haifa it rose 1.5%. In the central district there was a 1% fall, and there was a 0.7% fall in Tel Aviv.

New home prices rose by 0.5% between the two periods.

In rents, the trend was mixed. For tenants renewing leases, rents rose 2.6%. In new leases, there was a 4.7% rise.

Market sources estimate that although the moderation in the annual inflation rate to 1.5% supports an interest rate cut, the continuing pressures in the housing market and the rise in rents for new tenants, together with the volatility in oil prices and in the shekel exchange rates could lead the Bank of Israel to retain a cautious monetary policy in its next interest rate decision.

Published by Globes, Israel business news - en.globes.co.il - on August 14, 2026.