The Central Bureau of Statistics (CBS) released figures on Wednesday showing that the cost of living in Israel has continued to record a rise.
Data showed that there was a 0.3% rise in inflation in the previous month, which meant that the total year-on-year increase in the consumer price index (CPI) climbed to 5.4%.
This is the highest the CPI has been seen 2008. Economists had been expected a 0.1% rise in inflation in January at the most.
The CPI
The rise in CPI in the last month was due to an increase in costs of healthcare, which rose by 1%, home maintenance that increased by 1.4% and food prices that rose by 0.9%.
There was a 4.9% year-on-year drop in the prices of shoes and clothing, while a 1.9% drop was also seen in prices of fresh vegetables. A 1.6% decrease in costs of entertainment and culture was also recorded.
Even though the Bank of Israel has consistently increased the interest rates for taming down inflation, the cost of living still remains above the bank’s target range.
This means that it is likely that the Israeli central bank will continue to hike interest rates. There was also a 0.2% rise in apartment prices from November to December last year.
The other 10 months of 2022 had seen housing prices rise by 1.5% on average.
Housing prices
The highest increase in housing prices was recorded in Jerusalem, as prices rose by 1.4%, while there was a slight price decline of 0.2% recorded in Tel Aviv.
This means that in the last year until December 2022, there was a 17.1% increase in housing prices, which had stood at 18.8% in November.
Even though this showed a slowdown, it still causes affordability problems. The average property price in the last quarter of 2022 was NIS 1,961,000.
This figure had been NIS 1,767,000 in the last quarter of 2021. The increase has been greater in Tel Aviv in the last year.
Prices in Tel Aviv in 2021 had been NIS 2,642,000, but they rose to NIS 3,092,000 in the last quarter of 2022.
Prices in northern Israel had increased about 27% in the same duration, while Jerusalem and central Tel Aviv have seen increases of 20.4% and 19.9%, respectively.
Other cities
Other than Tel Aviv, the most expensive cities in Israel for buying a home are Ramat Gan, Jerusalem, Kfar Saba and Bat Yam.
The highest increases in housing prices have been seen in Bat Yam by 39%, Bnei Brak by 26% and Petach Tikva, Beit Shemesh and Netanya by 26%, 24% and 22%, respectively.
Ashkelon, Haifa and Beersheba are the cheapest cities for purchasing houses. The Finance Ministry also published a report this week, which showed that there was a 39% decline in housing purchases in December.
It is the lowest level that has been recorded in the country since 2008, when the worldwide financial crisis had had an impact on prices.
There has been a decline in new home contractor sales and the number of secondhand apartments being sold is also the lowest it has been in two decades.