A Reuters poll of analysts had projected an inflation rate of 4.8% last month. CPI fell 0.3% in August from July, led by declines in transport, telecommunications, clothing and footwear, the bureau said.

In a bid to cool inflation, Israel's central bank has raised its benchmark rate to 2% from 0.1% in April, the last move a strong 75 basis-point hike on Aug. 22. Policymakers are expected to raise the key rate again by at least another 50 basis points at its next decision on Oct. 3.

(Reporting by Steven Scheer; Editing by Hugh Lawson)