Israel’s yearly inflation rate has soared above 5%, on an annual basis, as home prices have increased by almost 18%. The Central Bureau of Statistics stated this evening that Israel’s Consumer Price Index (CPI) increased by 1.1% in July, considerably exceeding the economists’ forecast of between 0.5% and 0.7%. It puts the inflation rate at its highest level for well over a decade. At 5.2% over the past 12 months, it is already much higher than the Bank of Israel’s yearly goal range of between 1% and 3%.

Fresh fruit prices increased by 8.5%, transportation costs by 3.3%, and housing costs increased by 1.2% in July. Prices for clothing and shoes, on the other hand, decreased by 4%.

According to the Central Bureau of Statistics, housing prices increased by 2% in May-June compared to April-May and are up 17.8% over the previous year, which is up from 15.9% last month.

It has to be said that so far the inflation was very low compared to the rest of the world. This remains true even after the latest reading. However, with July CPI exceeding the expectations, it demonstrates the narrowing of the gap. Finally, while the inflation is currently a global problem, it is especially acutely felt in Israel in a view of a higher basic price levels.