November CPI surprises slightly to the downside, inflation eases to 2.4%

ISRAEL - In Brief 16 Dec 2025 by Sani Ziv

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Israel’s consumer price index, published yesterday, surprised slightly to the downside, falling by 0.5% in November, compared with our forecast of a 0.4% decline and a 0.3% decline in the consensus forecast. As a result, annual inflation eased to 2.4%, its lowest level since November 2021. The decline clearly reflects seasonal patterns including a sharp drop in prices of travel abroad (5.6%) (driven by seasonality, the return of foreign airlines, and the continued appreciation of the shekel), a decline in fresh-produce prices (3.5% and 4.9%) alongside a sharp fall in recreation and vacation services (8.0%). Service prices showed signs of moderation: Health and education services both declined by 0.2%, signaling a slowdown in price pressures. We closely monitor developments in tradable and non-tradable goods prices, as these measures are key inputs into the Bank of Israel’s inflation assessment and interest-rate decisions. In November, non-tradable prices rose by 3.4% year over year, marking a clear slowdown from 4.1% in August. Tradable goods prices increased by just 1.2% over the past 12 months and were significantly influenced by the recent appreciation of the shekel. The chart below shows the 12-month inflation rates for tradable and non-tradable goods, highlighting a sharp deceleration in both components, most notably in tradables, reflecting the strong currency appreciation.Inflation dynamics by component: tradable vs. non-tradable prices Source: Israel Central Bureau of Statistics (CBS)The annual inflation rate, now at 2.4%, lies below the Bank of Israel’s 3% upper target. Importantly, this figure already incorporates the VAT increase implemented in January 2025 ...