Israel: Any return ticket from sub-2%?

Research evidence excerpt

Israel: Any return ticket from sub-2%?

J P M O R G A N CEEMEA Economic Research

15 June 2026

Israel: Any return ticket from sub-

2%?

• Inflation remained steady at 1.9%oya in May, surprising to the downside EM, Economic and Policy Research

(JPMe 2.2) Anatoliy A Shal

• Housing remains the only big-ticket component with solid momentum (971)anatoliy.a.shal@jpmorgan.com4561-2005

J.P. Morgan Securities plc• Core inflation is running at ~1% saar, and median momentum was

marginally negative in May

• Soft May CPI print solidifies the case for a July rate cut by the BoI

Inflation remained steady at 1.9%oya in May, surprising visibly to the downside

(JPMe and consensus 2.2). Food inflation was significantly softer than we had

anticipated, in part due to volatile fruit and vegetables. The dynamics of global

agricultural prices translated into local currency terms suggests that food inflation

should remain depressed in the coming quarters. Energy prices also surprised to the

downside — a decrease in natural gas prices pulled the energy index lower.

The momentum in our measure of core inflation (ex. food and energy) has

remained at around 1%m/m, saar, for three months in a row, with core goods at

about -1.0% 3m saar and core services at ~1.8%. Within services, the housing

component remains the main consistent inflation driver (3.4% 3m saar), even as

house prices continue to slide lower. In May, airfares surprised with a sizeable

decline despite limited supply of services by international carriers — and, given the

level of prices, a strong reversal higher does not appear too likely in the coming

months. Looking through the individual ups and downs, the median inflation

momentum across 115 components was slightly negative in May, its third negative

reading in five months this year.