Inflation and housing prices have been rising sharply for several years, according to new official data released on Monday, continuing a worrying trend for Israel’s economy.
Altogether, Year-on-year inflation is now at 5.2 percent According to data published by the Central Bureau of Statistics, for July, there has been an increase of 0.8% in a month, and is growing at the fastest rate for 14 years.
Although Israel’s numbers are smaller than the US – where rates seem to be slowing down 8.5% for July – The combination of price hikes, interest rate hikes, uncertainty in the technology sector and fairly stagnant wages creates one of the toughest economic environments in recent years.
On top of that, housing prices are rising at an annual rate of 17.8%, the fastest rate in a decade. Far from slowing down in response to rising interest rates, home prices are on the rise again, up 2% between May and June 2022 compared to the April-May period.
Prices have risen in all regions except southern Israel, and have risen sharply in the past month in Jerusalem and the north. But there has been a double digit increase in every part of the country as compared to last year.
The average price of an apartment is now NIS 1,880,900 ($580,623) for the second quarter of 2022, an increase of NIS 80,000 ($24,695) from the first quarter of the year. In Tel Aviv, the average price of an apartment is now over NIS 4,000,000 ($1,234,777), while in Ramat Gan, Kefar Sabah and Jerusalem, prices exceed NIS 2,500,000 ($771,736).
Another key sector that has seen substantial price increases is fuel. Prices have increased by 8.7% during the last month, an increase of 108% over the previous year.
There has also been an increase in the index which drives up prices for construction, agriculture and transportation. And these are reflected in the rising cost of fresh fruit (8.5%); Transportation (3.3%); and culture and entertainment (1.2%). The price of clothes and shoes has declined by 4%.
As a result of these increases, Israel’s consumer price index (CPI) rose 1.1% in July. This means that the CPI is up 4.4% since the beginning of the year, and looking at the trend over the past four months, the annual growth in CPI is now 5.9%. As high as it may sound, it is below OECD average 9.6% for May, the last month for which data is currently available.
