Israel’s Consumer Confidence for December 2025 registered at -16.57, according to the latest release on January 12, 2026, from the Sigmanomics database. This figure fell short of the market estimate of -15.20 and declined from November’s -15.48. The index remains negative, indicating persistent consumer caution amid a complex macroeconomic environment.

Drivers This Month

• Monetary tightening by the Bank of Israel has increased borrowing costs, dampening consumer optimism.
• Fiscal policy uncertainty, with ongoing debates over budget allocations, has contributed to cautious spending.
• Heightened geopolitical risks in the region have added to consumer unease.

Policy Pulse

The Bank of Israel’s recent rate hikes, aimed at curbing inflation, have tightened financial conditions. This has directly impacted consumer borrowing and spending power, reflected in the softer confidence reading.

Market Lens

Following the release, the Israeli shekel (ILS) showed mild depreciation against the US dollar, while short-term government bond yields edged higher, signaling market sensitivity to weakening consumer sentiment.

Consumer confidence is a leading indicator of household spending, which accounts for roughly 60% of Israel’s GDP. The December 2025 reading of -16.57 compares unfavorably with prior months: November’s -15.48, October’s -25.21, and the 12-month average of approximately -20. The improvement from October to November was short-lived, with December reversing some of those gains.

Historical Context

• May 2025: -23.10
• August 2025: -22.05
• September 2025: -20.68
• October 2025: -25.21 (notably weak)
• November 2025: -12.36 (temporary rebound)
• December 2025: -16.57 (decline resumes)

Macroeconomic Indicators

Inflation remains above the Bank of Israel’s target range, prompting a series of interest rate hikes that have pushed the benchmark rate to 4.75%. Unemployment remains low at 3.80%, but wage growth has slowed, limiting real income gains. The government’s budget deficit is projected at 3.50% of GDP for 2025, with fiscal tightening measures under discussion.

What This Chart Tells Us

Market Lens

Immediate reaction: The Israeli shekel weakened 0.30% against the US dollar within the first hour post-release, while 2-year government bond yields rose by 5 basis points, reflecting increased risk aversion.

Bullish Scenario (20% Probability)

Consumer confidence stabilizes or improves as inflation moderates and fiscal policy clarity emerges. Wage growth accelerates, supporting household spending. This scenario would support a modest GDP growth rebound in H1 2026.

Base Scenario (55% Probability)

Confidence remains subdued but stable around current levels. Monetary policy remains restrictive, and geopolitical risks persist. Consumer spending grows slowly, keeping GDP growth moderate but positive.

Bearish Scenario (25% Probability)

Confidence deteriorates further due to prolonged inflationary pressures, fiscal tightening, or escalation of regional conflicts. This could trigger a contraction in consumer spending and risk a technical recession.

Risks and Opportunities

• Upside: Successful inflation containment and fiscal stimulus could boost confidence.
• Downside: External shocks, including geopolitical flare-ups, could deepen pessimism.
• Monetary policy adjustments will be critical to watch for signs of easing or further tightening.

Israel’s December 2025 Consumer Confidence reading of -16.57 signals a cautious consumer base facing a challenging macroeconomic backdrop. The interplay of monetary tightening, fiscal uncertainty, and geopolitical risks weighs on sentiment. While the index remains above the lows seen in mid-2025, the recent decline after November’s rebound suggests consumers remain wary. Policymakers will need to balance inflation control with supporting growth to prevent a deeper erosion of confidence.

Investors and analysts should monitor upcoming inflation data, government budget announcements, and regional developments closely, as these will shape consumer sentiment and economic momentum in 2026.

Key Markets Likely to React to Consumer Confidence

Consumer confidence data often influences currency, bond, and equity markets sensitive to domestic demand shifts. The USDIILS currency pair typically reacts to changes in Israeli economic sentiment, with confidence declines often weakening the shekel. The TA35 index, Israel’s benchmark equity index, tends to reflect consumer-driven earnings outlooks. In fixed income, the ILGOV2Y (2-year government bond) yield often rises on weaker confidence due to inflation and rate hike expectations. Additionally, the BTCUSD pair can exhibit risk sentiment correlations, while the EURILS pair also moves with regional risk appetite.

FAQs

What does Israel’s Consumer Confidence Index indicate?

The index measures household sentiment about the economy and future spending, influencing economic growth forecasts.

How does monetary policy affect consumer confidence?

Higher interest rates increase borrowing costs, reducing spending and lowering confidence.

Why is geopolitical risk important for consumer sentiment in Israel?

Regional tensions can create uncertainty, prompting consumers to delay spending and save more.

Takeaway: The December 2025 dip in Israel’s Consumer Confidence highlights a cautious consumer outlook amid tightening financial conditions and geopolitical uncertainty, signaling potential headwinds for growth in early 2026.