Israel Inflation Rate Hits 11-Month Low

Israel’s annual inflation rate eased to 3.1% in May 2025 from 3.6% in the previous month, coming in below market expectations of 3.4%.

This marked the lowest reading since June 2024, bringing inflation closer to the government’s target range of 1% to 3%.

The slowdown was driven by a 2.4% drop in transportation costs, including a sharp 7.9% decrease in expenses for foreign travel and flights.

Fresh vegetable prices also fell by 0.6%, while tenant-owned housing services edged down 0.3%.

These declines were partly offset by increases in fresh fruit prices (+3.9%), clothing and footwear (+1.4%), and culture and entertainment (+0.6%).

Rents continued to rise, with renewals climbing 2.7% and rents for new tenants jumping 5.2%.

On a monthly basis, consumer prices fell 0.3% in May, compared to market forecasts for a flat reading, following a 1.1% increase in April.