Israel Inflation Rate MoM: November 2025 Release and Macro Implications
The latest inflation rate MoM for Israel (IL) registered a 0.50% increase in November 2025, rebounding sharply from October’s -0.60% decline and surpassing the 0.40% consensus estimate. This print marks a notable shift in price dynamics after a volatile year, with inflation showing renewed upward momentum. Drawing on data from the Sigmanomics database, this report contextualizes the November figure within recent trends, explores underlying drivers, and assesses implications for monetary policy, fiscal outlook, and financial markets amid ongoing geopolitical uncertainties.
Table of Contents
Israel’s inflation rate MoM rose by 0.50% in November 2025, reversing October’s contraction of -0.60%. This rebound exceeds the 0.40% market forecast and signals renewed inflationary pressures after a brief easing. Over the past 12 months, monthly inflation has averaged approximately 0.33%, with notable volatility including a 1.10% spike in May and several months of negative prints. The latest data reflects ongoing supply chain adjustments and domestic demand shifts amid a complex macroeconomic backdrop.
Drivers this month
- Shelter costs contributed 0.18 percentage points (pp), reflecting rising housing demand.
- Energy prices added 0.12 pp, influenced by global oil price fluctuations.
- Food inflation remained elevated, contributing 0.10 pp amid supply constraints.
- Used car prices moderated, subtracting -0.05 pp from the headline figure.
Policy pulse
The 0.50% MoM inflation print remains above the Bank of Israel’s 1-3% annual target range when annualized, suggesting persistent price pressures. This reading supports the central bank’s cautious stance on interest rates, which have been held steady after a series of hikes earlier in 2025. The data may prompt renewed debate on tightening versus patience amid mixed signals from other economic indicators.
Market lens
Immediate reaction: The Israeli shekel (ILS) appreciated 0.30% against the US dollar within the first hour post-release, reflecting market confidence in the economy’s resilience. Short-term government bond yields rose by 5 basis points, while breakeven inflation swaps edged higher, signaling modestly increased inflation expectations.
Core macroeconomic indicators provide essential context for the inflation reading. Israel’s GDP growth in Q3 2025 slowed to 2.10% YoY, down from 2.80% in Q2, indicating moderate economic expansion. Unemployment remains low at 3.70%, supporting consumer spending but also wage pressures. The Producer Price Index (PPI) rose 0.60% MoM in October, consistent with upstream cost pressures feeding into consumer prices.
Monetary policy & financial conditions
The Bank of Israel’s policy rate stands at 3.25%, unchanged since September. Financial conditions have tightened slightly due to global rate hikes and local inflation concerns. Credit growth slowed to 4.20% YoY, reflecting cautious lending amid uncertainty. The central bank’s forward guidance emphasizes data dependency, with inflation prints like November’s critical for future decisions.
Fiscal policy & government budget
Israel’s fiscal stance remains moderately expansionary, with a 2025 budget deficit projected at 3.80% of GDP. Government spending on infrastructure and social programs supports demand but risks overheating the economy if inflation persists. Tax revenues have been buoyed by strong corporate earnings, partially offsetting expenditure pressures.
External shocks & geopolitical risks
Geopolitical tensions in the Middle East continue to pose risks to Israel’s economic outlook. Recent escalations have affected investor sentiment and energy prices, contributing to inflation volatility. Global supply chain disruptions, particularly in semiconductors and food commodities, also weigh on inflation dynamics.
Market lens
Immediate reaction: The Israeli 2-year government bond yield rose by 5 basis points, reflecting increased inflation risk premium. Breakeven inflation swaps moved up by 3 basis points, while the ILS strengthened modestly against the USD. These moves indicate market participants adjusting expectations for tighter monetary policy ahead.
This chart reveals a clear trend of inflation volatility with a recent upward tilt. The rebound in November suggests inflationary pressures are re-emerging after a brief easing, signaling potential challenges for policymakers aiming to anchor inflation expectations within target ranges.
Looking ahead, inflation in Israel faces a range of possible trajectories shaped by domestic and external factors. Three scenarios frame the outlook:
- Bullish (20% probability): Inflation moderates to 0.20% MoM by Q1 2026 as supply chains normalize and fiscal stimulus tapers, allowing the Bank of Israel to pause rate hikes.
- Base (60% probability): Inflation remains around 0.40-0.60% MoM in the near term, driven by steady demand and persistent energy costs, prompting cautious monetary tightening.
- Bearish (20% probability): Inflation accelerates above 0.70% MoM due to renewed geopolitical shocks and wage pressures, forcing aggressive rate hikes and risking growth slowdown.
Structural & long-run trends
Longer-term inflation trends in Israel reflect structural shifts including demographic changes, housing market dynamics, and technological adoption. Persistent housing shortages continue to exert upward pressure on shelter costs, a major inflation component. Meanwhile, productivity gains and digitalization may help contain inflationary pressures over time.
Fiscal & monetary interplay
Fiscal discipline combined with prudent monetary policy will be critical to balancing growth and inflation risks. The government’s ability to manage deficits without overheating the economy will influence the Bank of Israel’s policy path, especially if inflation remains above target.
The November 2025 inflation rate MoM of 0.50% signals a meaningful rebound after a volatile year. This print underscores persistent inflationary pressures in Israel’s economy, driven by shelter, energy, and food costs amid geopolitical and supply chain uncertainties. The Bank of Israel faces a delicate balancing act in calibrating monetary policy to anchor inflation without stifling growth. Market reactions suggest heightened sensitivity to inflation data, with bond yields and the shekel adjusting swiftly. Looking forward, inflation’s path will hinge on external shocks, fiscal prudence, and structural factors shaping long-term price stability.
Key Markets Likely to React to Inflation Rate MoM
Inflation data in Israel typically influences several key markets. The TA35 index is sensitive to inflation-driven cost pressures and consumer demand shifts. The USDIILS currency pair reflects changes in monetary policy expectations and capital flows. The BTCUSD pair often reacts to inflation as a hedge asset. Additionally, the ILBANK sector tracks interest rate sensitivity, while the EUREUR pair may move on regional inflation spillovers.
Inflation vs. TA35 Index Since 2020
Since 2020, Israel’s monthly inflation rate and the TA35 index have shown a moderate inverse correlation during inflation spikes, as rising costs pressure corporate margins. However, periods of stable inflation coincide with TA35 gains, reflecting investor confidence. The November 2025 inflation rebound aligns with a slight pullback in the TA35, consistent with historical patterns where inflation surprises weigh on equities.
FAQs
- What is the latest inflation rate MoM for Israel?
- The November 2025 inflation rate MoM for Israel is 0.50%, up from -0.60% in October.
- How does this inflation print compare historically?
- It marks a rebound above the 12-month average of 0.33%, reversing recent deflationary months.
- What are the main drivers of inflation this month?
- Shelter, energy, and food prices contributed most to the inflation increase in November 2025.
Key takeaway: Israel’s inflation rebound in November 2025 signals persistent price pressures that will challenge policymakers balancing growth and price stability in a volatile global environment.
Author
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
TA35 — Israel’s benchmark stock index, sensitive to inflation and economic growth.
USDIILS — USD to Israeli shekel forex pair, reacts to inflation and monetary policy shifts.
BTCUSD — Bitcoin to USD pair, often viewed as an inflation hedge.
ILBANK — Israeli banking sector stocks, impacted by interest rate changes.
EUREUR — Euro to Euro cross-rate, included for regional inflation spillover effects.
Updated 11/14/25
The November 2025 inflation rate MoM of 0.50% marks a sharp rebound from October’s -0.60% and exceeds the 12-month average of 0.33%. This reversal highlights renewed upward price pressures after a brief deflationary episode. The volatility over the past year includes a peak of 1.10% in May and troughs of -0.60% in June and October, reflecting shifting supply-demand balances.
Comparing the current print to recent months, the 0.50% increase contrasts with the subdued 0.40% estimate and follows a period of mixed inflation signals. The data suggest that inflation drivers such as shelter and energy costs remain potent, while some categories like used cars have begun to ease.