Israel Inflation Rate Falls Below 3%, Reenters Target

Israel's annual inflation eased for the second month to a over one-year low of 2.9% in August 2025, returning to the government’s target of 1%-3% for the first time since June 2024.

This compares with July’s reading of 3.1% and market expectations of 2.8%.

The slowdown was driven by lower fresh fruit prices, seasonal shifts in clothing and home goods, and the appreciating shekel.

Price growth was observed in culture and entertainment (2.9%), transportation and communication (1.6%), fresh vegetables (1.5%), housing (0.8%), and home maintenance (0.3%), while prices fell for fresh fruit (-2.7%), clothing and footwear (-1.6%), and furniture and household equipment (-0.5%). The Israeli currency gained about 1.6% against the dollar in August.

On a monthly basis, the CPI went up by 0.7% in August, after a 0.4% increase in July and slightly above analysts' estimates of a 0.6% rise.