The economy wounded by the war also marks Israel's elections

JerusalemThe cost of rent, shopping, transport and bills has become one of the main concerns for Israeli families. Four days before the October 27th elections, many are wondering if the next government will be able to ease this pressure after more than three years of war and high military spending. Security remains central to the campaign, but the economy also weighs on the vote. A survey by the research center Israel Democracy Institute (IDI) indicates that the cost of living and the economy are priorities for 38% of Jewish respondents and 46% of Arabs. A malaise that is especially concentrated on the rising cost of housing and food, two structural problems that have been dragging on for years.

Housing is one of the main focuses of this pressure. According to the country's Central Bureau of Statistics, the average price of a home in Israel reached 699,000 euros in the second quarter of 2026. In Tel Aviv, the average was approximately 1.03 million euros, and in Jerusalem, 836,000 euros. Rent also offers no respite: in Jerusalem it is around 2,010 euros, compared to a gross monthly minimum wage of about 1,900 euros. The price increase is also noticeable at the supermarket. According to the price level index of the Organisation for Economic Co-operation and Development (OECD), which compares the cost of a basket of goods and services between countries, prices in Israel are 34% higher than the organization's average. Housing and food represent 44% of Israeli household spending.

“Food prices are high for many reasons: import restrictions, a lack of competition, stagnant agricultural production in the face of a rapidly growing population, and poor regulation,” explains Benjamin Bental, a researcher at the Taub Center, a socio-economic policy research center in Jerusalem, to ARA. Regarding housing, he points to insufficient construction, poor urban planning, and fiscal distortions as factors contributing to rising prices.

The war on several fronts has also added some pressure to the economy, especially to public accounts. Bental estimates that the cost of the conflict is around 129 billion euros, nearly 22% of the annual GDP. An expense that leaves limited margin to expand public investment without increasing state revenues or redistributing budgetary priorities.

Despite this economic impact, the Bank of Israel projects growth of 4% in 2026 and 5.5% in 2027. But growth forecasts do not necessarily translate into an improvement in living conditions for everyone: low-income households, people with temporary jobs, and those facing high rents have less room to absorb new price increases. According to the IDI, the economic effects of the war particularly affect the Arab population and young people aged 20 to 24, who often work in sectors such as tourism and leisure, or in temporary and less stable jobs.

“Young Israelis face several barriers to financial independence,” explains Kyrill Shraberman, a researcher at the Taub Center and Bar-Ilan University, to this newspaper. The increase in housing costs over the last two decades, he says, makes it difficult for a young person living alone to buy an apartment. Furthermore, many job opportunities are concentrated in the center of the country and in Tel Aviv, where high rents make saving even more complicated.

Young people, the most affected

A survey by the National Union of Israeli Students calculates that young people spend on average 1,985 euros per month, while the gross income of those who work is around 1,790 euros. Housing and household expenses represent 906 euros per month. In this context, eight out of ten students work while studying and almost half receive family support. This year, 29% are considering leaving Israel after graduating; among them, 79% cite the cost of living as one of the reasons.

Despite this concern, the economy has not occupied a central place in the electoral debates. An analysis by the Israeli economic media outlet Calcalist points out that Likud, the party of Prime Minister Benjamin Netanyahu, and a large part of the coalition's parties have not presented an economic program. In fact, Netanyahu has run in four consecutive elections since 2019 without presenting a comprehensive economic platform, according to the analysis.

In the opposition, Yisrael Beiteinu, a secular right-wing party that stands as the sixth force in the polls, is one of the formations that has specified the most proposals. It plans to allocate about 862 million euros to the police and 287 million to artificial intelligence, in addition to increasing the defense budget by 7.180 billion euros annually, without detailing its overall funding. Yashar!, the centrist formation of Gadi Eisenkot, the prime minister's main rival in these elections, proposes reducing income tax and compensating for the loss of revenue by combating the underground economy. It also advocates linking municipal tax breaks to the socioeconomic situation, but has not specified how the measure would be applied.

Looking ahead to the next government, experts advocate for reforms to reduce restrictions in the food market, invest in public transport, expand job opportunities, and strengthen educational investment for groups with fewer opportunities, especially the ultra-Orthodox and Arabs. The cost of living will not determine the vote on its own, but it will test the new government's ability to reconcile military spending with social investments and ensure that living in Israel is more affordable.