Israel Inflation Rate YoY: November 2025 Analysis and Macro Outlook
The latest inflation rate YoY for Israel (IL) was released on November 14, 2025, showing a steady 2.50% increase, matching the previous month’s figure and slightly above market expectations of 2.40%. This report draws on the Sigmanomics database to provide a comprehensive review of recent inflation trends, contextualizes them against historical data, and assesses the broader macroeconomic implications for Israel’s economy.
Table of Contents
Israel’s inflation rate has stabilized at 2.50% YoY in November 2025, maintaining the level recorded in October and marking a significant decline from the 3.60% peak in May 2025. This steady reading aligns closely with the central bank’s inflation target range of 1.50% to 3.00%, signaling a period of relative price stability after months of elevated inflationary pressures.
Drivers this month
- Shelter costs contributed approximately 0.18 percentage points to inflation.
- Energy prices remained flat, exerting a neutral effect compared to prior months.
- Food prices showed a modest increase of 0.10 percentage points, reflecting seasonal supply constraints.
- Used car prices declined slightly, subtracting -0.05 percentage points from the headline rate.
Policy pulse
The current inflation rate sits comfortably within the Bank of Israel’s target band. This stability reduces immediate pressure for aggressive monetary tightening, allowing policymakers to maintain a cautious stance. The central bank’s key interest rate remains at 3.25%, unchanged since September 2025, reflecting confidence in the inflation outlook.
Market lens
Immediate reaction: The Israeli shekel (ILS) appreciated 0.30% against the US dollar within the first hour post-release, while 2-year government bond yields edged down by 5 basis points, signaling market relief at the steady inflation reading.
Core macroeconomic indicators underpinning the inflation trend reveal a mixed but generally stable environment. GDP growth for Q3 2025 was reported at 3.10% YoY, slightly below the 3.30% average for the past year but still robust. Unemployment remains low at 4.20%, supporting consumer demand without overheating the economy.
Monetary Policy & Financial Conditions
The Bank of Israel’s monetary stance remains moderately restrictive. Real interest rates, adjusted for inflation, hover near zero, balancing growth support and inflation control. Credit growth has slowed to 4.50% YoY, down from 6.20% six months ago, reflecting tighter lending standards and cautious borrower behavior.
Fiscal Policy & Government Budget
Fiscal policy remains expansionary but measured. The government’s budget deficit narrowed to 3.80% of GDP in Q3 2025, down from 4.50% a year earlier, aided by higher tax revenues and controlled spending. Infrastructure investments continue, supporting long-term productivity gains without stoking immediate inflation.
Structural & Long-Run Trends
Long-term inflation expectations remain anchored near 2%, consistent with the central bank’s target. Structural factors such as technological adoption and productivity improvements continue to exert downward pressure on prices. However, demographic shifts and housing demand sustain upward pressure on shelter costs.
This chart highlights a clear downward trend in inflation over the past six months, reversing the upward spike seen in early 2025. The stabilization at 2.50% signals a transition from volatile inflation to a more predictable environment, supporting steady economic planning and investment.
Market lens
Immediate reaction: The IL10Y government bond yield declined by 7 basis points post-release, reflecting investor confidence in subdued inflation risks. The Israeli shekel strengthened modestly, while equity markets showed mild gains, indicating positive sentiment.
Looking ahead, inflation in Israel faces a balance of risks. The baseline scenario projects inflation holding near 2.50% through Q1 2026, supported by stable commodity prices and moderate wage growth. The Bank of Israel is expected to maintain current interest rates, monitoring inflation closely.
Bullish scenario (20% probability)
- Global energy prices decline sharply, reducing cost-push inflation.
- Fiscal consolidation accelerates, easing demand pressures.
- Inflation falls below 2%, prompting potential rate cuts.
Base scenario (60% probability)
- Inflation remains stable around 2.50%, consistent with target.
- Monetary policy stays steady, supporting balanced growth.
- Moderate wage increases and stable commodity prices.
Bearish scenario (20% probability)
- Supply chain disruptions re-emerge, pushing prices higher.
- Geopolitical tensions increase energy and food costs.
- Inflation rises above 3%, forcing monetary tightening.
Israel’s inflation rate at 2.50% YoY signals a period of price stability following earlier volatility. The data from the Sigmanomics database confirms that inflation is well-anchored within the central bank’s target range, supported by balanced monetary and fiscal policies. External risks remain, but current trends favor a steady macroeconomic environment.
Investors and policymakers should watch for shifts in energy prices and geopolitical developments, which could alter the inflation trajectory. For now, the outlook supports moderate growth with contained inflationary pressures, providing a favorable backdrop for financial markets and economic planning.
Key Markets Likely to React to Inflation Rate YoY
The inflation rate in Israel influences several key markets, including equities, bonds, currency, and commodities. The following symbols historically track inflation dynamics closely and are likely to react to future inflation releases:
- TA35 – Israel’s benchmark equity index, sensitive to inflation-driven cost pressures and consumer demand.
- USDILS – The USD/ILS currency pair, reflecting inflation’s impact on monetary policy and exchange rates.
- TEVA – A major Israeli pharmaceutical stock, impacted by inflation through input costs and pricing power.
- BTCUSD – Bitcoin, often viewed as an inflation hedge, reacts to inflation surprises globally.
- EURILS – Euro to Israeli shekel exchange rate, sensitive to inflation differentials and capital flows.
Inflation Rate vs. TA35 Index Since 2020
Since 2020, the TA35 index has shown a moderate inverse correlation with Israel’s inflation rate. Periods of rising inflation, such as mid-2021 and early 2025, coincided with increased market volatility and subdued equity returns. Conversely, inflation stabilization phases, like late 2025, have supported equity gains. This relationship underscores the importance of inflation trends for equity market sentiment and valuation.
FAQs
- What is the current inflation rate YoY for Israel?
- The inflation rate for Israel in November 2025 is 2.50% YoY, steady from October’s reading.
- How does Israel’s inflation compare historically?
- Inflation peaked at 3.60% in May 2025 and has since declined to 2.50%, aligning with the central bank’s target.
- What factors influence Israel’s inflation rate?
- Key factors include shelter costs, energy prices, food supply, monetary policy, and external geopolitical risks.
Takeaway: Israel’s inflation rate has stabilized at 2.50%, reflecting effective policy and easing external pressures. The outlook remains balanced but requires vigilance on geopolitical and commodity risks.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
The November 2025 inflation rate of 2.50% matches October’s figure and is well below the 12-month average of 3.20%. This marks a clear deceleration from the mid-2025 peak of 3.60% in May. The trend suggests that inflationary pressures are easing, driven by stable energy prices and moderated wage growth.
Comparing recent months, inflation declined from 3.10% in August and 2.90% in September, before stabilizing at 2.50% in October and November. This pattern reflects the fading impact of earlier supply chain disruptions and commodity price shocks that inflated prices earlier in the year.