Israel macro preview: key inflation and growth data ahead

ISRAEL - In Brief 13 Feb 2026 by Sani Ziv

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Next week finally provides hard data to work with. On Sunday, the Central Bureau of Statistics will publish the January CPI, the first inflation print of 2026. On Monday, it will release the Q4 and full-year 2025 national accounts, which will allow a more comprehensive assessment of how the economy ended 2025 and entered 2026. Let’s start with inflation Inflation: a milestone below the midpoint of the target? According to our forecast, broadly in line with market expectations, the January CPI is expected to decline by around 0.1%-0.2%. If realized, annual inflation would fall to around 1.9%, from 2.6% in December. The drop in annual inflation from 2.6% in December to 1.9% in January is largely a base effect, as a 0.6% VAT-driven increase in January 2025 is replaced by an expected 0.2% decline in January 2026. Such a reading would mark the lowest inflation rate in roughly four and a half years (last seen in mid-2021) and an important milestone, as inflation would fall below the midpoint of the Bank of Israel’s target range (1%–3%). Disinflation is being driven by a stronger shekel, lower oil prices (prior to the recent geopolitical tensions with Iran), and easing wage pressures, with annual wage growth moderating from 5%–6% to around 4%. Importantly, much of the adjustment is occurring on the supply side, through currency appreciation, lower import costs, and improved labor supply conditions. The chart below shows the monthly evolution of government revenues and expenditures as a share of GDP, alongside the fiscal deficit, highlighting the recent fiscal trend and the gradual moderation in the deficit.GRAPH 1Bank of Israel policy rate and 12-month inflation rateSource: B...