Inflation at 1.5 Percent, and August's Activity Index
Annual inflation stands at 1.5 percent. Yet this week's supermarket receipt looked more expensive than ever. Is someone lying? No. You are simply looking at two different things and giving them the same name.
The Bank of Israel reports inflation of 1.5 percent over the past 12 months, alongside an interest rate of 3.25 percent. On 16 September 2026, the bank released another figure: its monthly economic activity index rose by 0.4 percent in August. These two numbers sometimes appear in the same headline. But they measure entirely different things. One measures prices over a year. The other measures activity in a single month.
Why 1.5 percent does not feel that way at the checkout
The Consumer Price Index measures an entire basket: housing, food, transport, health and more. They do not all move together. Someone whose rent rose when their lease was renewed may experience an increase greater than 1.5 percent without the official figure being wrong. Someone whose fuel costs fell may experience the opposite. The 1.5 percent figure is a weighted average for the basket over 12 months.
And that expensive week at the supermarket? One week's costs can rise because of vegetables or fuel without changing the annual rate. A quiet week does not prove the year was cheap, either. The Central Bureau of Statistics publishes the annual basket in the Consumer Price Index. The Bank of Israel displays the rate alongside its interest rate. Both sources are preferable to calculations based on a receipt.
The activity index: One month, not a trend
Now for the 0.4 percent. A 0.4 percent rise in activity does not mean wages have risen or prices have fallen. An activity index summarizes current economic data, and it can rise even while one sector weakens. It does not replace a business's profit report.
Just as important, August is one month. The previous month may have moved differently, and without the full series you cannot say the economy is accelerating. What you can say is that the index published by the Bank of Israel rose by 0.4 percent in August.
A business planning its October inventory should not derive quantities from that 0.4 percent. It looks at its own orders. A month of vacations and holidays also behaves differently from a normal month. Anyone closing a quarter waits for the series, not a single data point.
Your contract does not follow the headlines
This brings us to the most practical point. Indexation in a rental contract or wage agreement follows the index named in the contract, usually the Consumer Price Index, not the activity index. Do not mix them up when calculating an increase.
Renewing a lease in October? Do not automatically add 1.5 percent. If the contract links the rent to a particular month's index, check the change from the contract's base index, not the annual rate displayed beside the interest rate. Both figures can be correct and still be different.
And a business owner whose supplier has raised its price list by 6 percent? That does not make the Bank of Israel's figure wrong. The supplier is pricing within a sector. The useful step is to compare offers, not argue with the index.
Until 21 October
So what should you check? On your payslip, whether there is indexation and which index it follows. In your rental contract, the base month. For an index‑linked mortgage, the repayment schedule after the Consumer Price Index is published, not after the activity index.
The next interest rate decision is scheduled for 21 October. If the next monthly index brings a surprise, the committee will see it beforehand. Until then, there is no reason to update a contract based on a feeling at the checkout. The 1.5 percent and 0.4 percent figures remain two separate releases, not a single number.
