Good news for people who like keeping their money: Israel's Consumer Price Index (CPI) has finally dipped slightly, dropping by 0.3% in August, according to a report from the Central Bureau of Statistics (CBS) on Thursday.
In the report for July 2022, CBS reported an increase of 1.1%, an amount that exceeded the expectations of analysts. That has become a recurring trend, as August’s downward move also exceeded analyst expectations.
The downward movement presents a glimmer of hope for Israelis, who have watched the country’s inflation rate rise by 5.2% since July of last year. Indeed, inflation itself has decreased as well, with the report showing the inflation rate over the last 12 months from August at 4.6%.
The primary driver behind the drop was a decrease in the price of fuel, which has fallen by 17.7% in the last month, marking a significant change following a period of continually climbing gas prices.
On the rise, however, is the price of rent, which has risen by 3.5%, reflecting the gradually climbing cost of real estate and housing in Israel. This rise is due in part to a lack of housing starts having been initiated during the early stages of the recent COVID-19 pandemic, leading to a decrease in new available homes.
Not enough housing starts in Israel
“There haven’t been enough housing starts over time,” said Prof. Danny Ben-Shachar from the Coller School of Management at Tel Aviv University in June, while groups of residents throughout Israel moved into tents to protest the unreasonable cost of rent.
“Israel’s population growth is the highest among OECD countries, meaning that in order to fill the needs for new households, there needs to be around 55,000 to 60,000 new houses a year, and that needs to be continuous. [Housing] is not continuously, stably rising with the needs of the population,” he said.
“Israel’s population growth is the highest among OECD countries, meaning that in order to fill the needs for new households, there need to be around 55,000 to 60,000 new houses a year, and that needs to be continuous. [Housing] is not continuously, stably rising with the needs of the population.”Prof. Danny Ben-Shachar