Israel’s Consumer Price Index Rises 0.7% in August, Annual Inflation at 2.9%

The Consumer Price Index (CPI) in Israel rose by 0.7% in August 2025 compared to July, according to data released by the Central Bureau of Statistics. Over the past 12 months (August 2024 to August 2025), inflation stood at 2.9%, within the Bank of Israel’s target range (1%–3%), but still reflecting ongoing pressures on the cost of living.

Notable monthly price increases were recorded in:

• Culture and entertainment: +2.9%

• Transportation and communications: +1.6%

• Fresh vegetables: +1.5%

• Housing: +0.8%

• Apartment maintenance: +0.3%

Conversely, declines were recorded in:

• Fresh fruit: -2.7%

• Clothing and footwear: -1.6%

• Furniture and home equipment: -0.5%

Rental Market Under Pressure

The housing sector continues to feel the strain:

• Rents rose by 2.7% for tenants who renewed contracts.

• For apartments with new tenants, rent increased by 5.5%.

This marks one of the steepest increases in rent in recent years, continuing a trend of growing pressure on the rental market, especially in urban centers.

Construction Input Costs Rising

The Residential Construction Input Price Index, which was recalculated starting August 2025 (base: July 2025 = 100), increased by 0.4%, reaching 100.4 points.

• Since January 2025, the index has grown by 4.2%.

• Materials and equipment prices rose by 0.3%, including:

  • Imported concrete: +3.2%

  • Mortar and slate: +2.3%

  • Blocks: +2.2%

• Decreases were recorded in:

  • Iron for construction: -3.2%

  • Construction networks: -2.5%

• Wages in construction rose by 0.5% in August, and have increased 9.7% over the past year, adding to rising input costs.

The housing market continues to show signs of cooling, with the Apartment Price Index recording a 0.2% drop in June–July 2025 compared to May–June. Annually, apartment prices rose by just 1.6%, reflecting a moderation trend that began earlier in the year.

Regional Changes (June–July vs. May–June 2025):

• Central District: -0.9%

• Tel Aviv: -0.2%

• Jerusalem: -0.1%

• North: +0.4%

• Haifa: +0.8%

• South: +0.4%

Annual Changes (vs. June–July 2024):

• North: +9.1%

• Haifa: +5.9%

• South: +2.3%

• Jerusalem: +1.9%

• Central District: -1.1%

• Tel Aviv: -0.3%

New Apartment Prices:

• Monthly decline of 0.8%

• Excluding government-supported transactions (which made up 33.1% of sales), the decline was only 0.3%

• Annually, new apartment prices rose by 2.7%

Industry and Services: Mixed Trends

• Industrial Output Price Index (domestic market): -0.2%, now at 120.5 points

  • Decreases:

    • Clothing products: -13.8%

    • Basic metals: -1.6%

    • Electrical equipment: -1.2%

  • Increases:

    • Equipment maintenance and installation: +7.2%

• Mining and quarrying index: +0.9%

Service Sector (Q2 2025):

• Increases:

  • Cleaning services: +3.4%

  • Security and guarding: +1.3%

  • Advertising: +1.0%

• Decreases:

  • Computer programming and consulting services: -2.9%

Food Prices: Modest Rise with Volatility in Key Items

The Food Price Index rose by a modest 0.1% in August, but notable fluctuations were recorded across categories.

Biggest Increases:

• Dry rice: +5.0%

• Black coffee: +3.8%

• Chocolate: +2.8%

• Wafers and cocoa: +2.4%

• Instant coffee: +1.8%

• Rolls, bagels, baguettes: +1.6%

• Fresh chicken: +1.4%

• Frozen beef: +1.1%

Biggest Decreases:

• Chicken and turkey liver: -4.2%

• Salty snacks: -3.5%

• Candies and sweets: -2.9%

• Sugar: -2.4%

• Tahini: -2.2%

• White flour: -2.0%

Vegetables & Fruits: Mixed Movement

• Overall vegetable and fruit index: -0.1%

• Fresh fruit: -2.7%

• Fresh vegetables: +1.5%

Notable Fresh Fruit Price Drops:

• Mangoes: -15.9%

• Peaches/nectarines: -11.9%

• Grapes: -10.6%

• Watermelons: -3.7%

• Plums, pears, pomegranates: ~-1.1% to -1.8%

Fresh Fruit Increases:

• Avocados: +3.8%

• Oranges: +3.4%

• Melons: +2.4%

Notable Fresh Vegetable Price Increases:

• Eggplants: +19.7%

• Kohlrabi: +18.2%

• Zucchini: +14.6%

• Cucumbers: +13.7%

• Cauliflower, fennel, mushrooms: +5% to +7%

Notable Decreases in Vegetables:

• Sweet potatoes: -9.8%

• Garlic, cabbage, peppers: -3% to -3.8%

• Lettuce, fresh beans: -1.5% to -2.1%

Summary

While annual inflation remains within target, the 0.7% monthly increase in August’s CPI signals that cost-of-living pressures persist, especially in housing and essential food categories. The cooling real estate market offers some relief for buyers, but renters continue to face sharp price hikes. Meanwhile, volatile food prices and rising construction input costs add complexity to the economic outlook as Israel enters the final quarter of 2025.