Israel's Consumer Price Index rose by 0.1% in June, in line with analysts' forecasts, as the country grapples with persistent inflation, a new report by the Central Bureau of Statistics reveals.
The annual inflation rate climbed to 2.9%, remaining within the Bank of Israel's target range but edging closer to the upper limit. A sharp increase in rent prices, particularly for new tenants, stood out among the various factors contributing to the overall price increase.
Significant price increases were observed in several categories: culture and entertainment rose by 1.2%, housing by 0.5%, and food and home maintenance each increased by 0.3%. For instance, the price of ice cream increased by 4.2%, wheat beer by 1.9%, crackers by 1.7%, and tahini by 1.5%.
Notable price decreases were recorded in fresh fruits and vegetables, which fell by 2.5%, transportation and communication, down by 0.4%, furniture and household equipment, down by 0.3%, and healthcare, which decreased by 0.2%.
Rent prices saw a substantial increase. For tenants renewing their leases, monthly rent rose by 2.2%, while new tenants (in sample apartments with tenant turnover) faced a steep 4.2% rise.
In the housing market (which is not included in the Consumer Price Index), there was a 0.8% increase when comparing transaction prices from April-May 2024 to those from March-April 2024.
A year-over-year comparison reveals dramatic regional differences in housing prices. Breaking down by district, the following price changes were observed: Jerusalem (2.1%), Northern District (0.6%), Haifa (0.7%), Central District (0.0%), Tel Aviv (1.2%), and Southern District (0.2%). Prices for new apartments decreased by 0.5%. Overall, housing prices rose by 3.4% over the past year.
In a year-over-year comparison of transaction prices from April-May 2024 to April-May 2023, the annual housing price index increased by 3.4%. All districts saw price increases: Haifa (8.3%), Northern District (4.9%), Southern District (3.6%), Jerusalem (2.9%), Tel Aviv (2.6%), and Central District (2.3%). The annual index for new apartment prices decreased by 0.9%.
Analysts predict that inflation will reach 3% as soon as July, hitting the upper limit of the Bank of Israel's target range. The central bank's forecast for the next 12 months projects an inflation rate of 3.2%.
In May, the CPI rose by 0.2%, with an average increase of 2.8% over the past 12 months. May's index was notably impacted by fruit and vegetable prices, which surged by over 10%. Conversely, Israelis' expenditures on overseas travel and domestic tourism decreased by 7.4%.
