Israel inflation still contained in February, but higher oil prices may push CPI up in coming months

ISRAEL - In Brief 16 Mar 2026 by Sani Ziv

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Israel’s February CPI rose by 0.2%, slightly above expectations, bringing annual inflation to 2.0%, up from 1.8% in January. Overall, the data suggest that inflation pressures remained relatively contained prior to the outbreak of the war at the end of February. Seasonal factors had only a limited impact on the index: A seasonal increase in fruit prices (+3.6%) was largely offset by a decline in clothing and footwear prices (-2.4%), leaving the overall monthly change relatively modest. Prices for overseas travel increased by about 0.9%, while most other components recorded moderate changes.Housing costs increased by 0.4% in February, slightly above the typical seasonal pattern, while rents rose by 4.5% over the past year, indicating that upward pressure in the housing market remained. Among tenants, rents for renewed contracts increased by 2.7%, while rents for new tenants rose by 5.8%, suggesting that rental inflation remains relatively elevated. By contrast, developments in the services sector point to more moderate inflationary pressures. Health services prices were broadly unchanged (-0.1%), while education services rose by 0.3% in February, leaving their respective annual increases at 2.1% and 2.6%. Food prices increased by 0.3% in February and 2.2% over the past year, indicating that food inflation has moderated compared with previous years. The chart below presents the 12-month CPI change, broken down into tradable and non-tradable components. Up to the outbreak of the war, tradable inflation had moderated significantly while non-tradable inflation (mainly services) remained relatively elevated, although it had also begun to ease gradually. Overall, the data poi...