Israel's Consumer Price Index fell by 0.6% in September, the Central Bureau of Statistics said Tuesday, bringing the annual inflation rate down to 2.5% — the lowest since February.
That compares to a 2.9% rate reported the previous month and reflects a steeper drop than September 2024, when the index declined by 0.2%.
The figures have fueled expectations that the Bank of Israel will lower its benchmark interest rate by a quarter percentage point at its next meeting in late November, or possibly sooner.
The sharpest price drops were recorded in fresh fruit (down 3.2%), culture and entertainment (2.4%), transportation and communication (2.2%), food (0.5%), clothing and footwear (0.3%) and both homeowners’ housing services and apartment maintenance (0.2% each).
In contrast, prices rose in categories such as fresh vegetables (up 3.5%), rent and healthcare (each rising 0.3%).
Rent prices continued to climb. For tenants renewing rental agreements, the average increase was 2.6%. For new tenants — apartments where the previous renter was replaced — rent rose by 5.3%.
The home price index fell for the sixth consecutive month, marking a cumulative drop of more than 2% over the past six months. A comparison of transactions from July–August 2025 with June–July 2025 shows a 0.6% decline in home prices.
Compared to the same period last year, prices in July–August 2025 were up just 0.7%, indicating a significant cooling in year-over-year growth.
Price changes between July–August 2025 and June–July 2025 varied across regions: Jerusalem saw a 1.0% increase; prices fell in the North (down 0.2%), Haifa (0.4%), Central region (1.8%), Tel Aviv (0.9%) and South (0.8%).
On an annual basis, home prices rose in the North (8.4%), Jerusalem (4.2%), Haifa (3.7%) and South (2.8%). They declined in the Central region (down 2.9%) and Tel Aviv (1.5%).
New home prices dropped by 1.2% between July–August 2025 and June–July 2025. Of all new home transactions, 39.4% were made under government-supported housing programs, up from 31.7% in the previous period.
Excluding subsidized deals, new home prices declined by 0.2%. Compared to the same period last year, new home prices were up 0.5%.