Food prices in Israel are 52% above the OECD average (2024), the second-highest after South Korea. Israel’s GDP per capita in PPP terms is about 14% below the OECD average (2024).
Israel’s cost of living has long been among the highest in the Middle East and comparable to many Western European countries, driven by factors like high demand in urban centers (e.g., Tel Aviv and Jerusalem), import dependencies, and geopolitical influences.
From 2020 to 2025, the period was marked by the COVID-19 pandemic’s initial deflationary dip, followed by global supply chain disruptions, energy price spikes, and domestic challenges including the October 2023 Hamas attack and ensuing Gaza conflict, which exacerbated inflation and housing pressures.
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Overall, consumer prices rose cumulatively by about 15% over these years, though housing outpaced this trend until a 2025 slowdown. Costs vary significantly by location—Tel Aviv is ~20–30% pricier than peripheral areas like Haifa or Beer Sheva—and by lifestyle, but below is a national overview focused on key categories.
Inflation Trends
Israel’s Consumer Price Index (CPI) inflation remained subdued in 2020 due to pandemic lockdowns but accelerated in 2021–2023 amid recovery and external shocks. By 2024–2025, it moderated as global energy prices stabilized and Bank of Israel policies took effect, though food and shelter components lagged. The table below summarizes annual average inflation rates:
| Year | Annual Inflation Rate (%) | Key Drivers |
|---|---|---|
| 2020 | -0.6 | COVID-19 lockdowns reduced demand; slight deflation. |
| 2021 | 1.5 | Post-pandemic rebound; supply chain issues. |
| 2022 | 4.4 | Global energy crisis and Ukraine war impacts. |
| 2023 | 4.2 | Heightened by October 7 events and import costs. |
| 2024 | 3.1 | Easing energy prices; full-year CPI up 3.8% from prior year. |
| 2025 | ~2.5 (through Sep) | Slowdown to 2.5% YoY in Sep; rental inflation at 3.4%. |
This cumulative ~15% rise means a basket of goods costing 10,000 ₪ in 2020 would cost ~11,500 ₪ by late 2025, excluding housing.
Housing: +25%
Housing remains Israel’s biggest expense, accounting for 30–40% of household budgets, with acute shortages in urban areas fueling price growth.
From 2020–2024, nominal home prices surged due to low interest rates, population growth, and investor demand, outpacing general inflation. A nationwide average owner-occupied dwelling cost ~1.5 million ₪ in 2020 and reached 2.27 million ₪ by Q2 2025.
Annual nominal growth:
- 2020: +5.5%
- 2021: +8.4%
- 2022: +10.4%
- 2023: +11.1%
- 2024: +8.5%
A 1-bedroom apartment in a city center averaged ~3,000–3,500 ₪ in 2020 but hit 4,200 ₪ by Nov 2025 (Numbeo data), a ~25% increase adjusted for inflation.
Food and Groceries: +20%
Groceries rose steadily with import reliance (e.g., on grains and dairy) and supply disruptions, tracking CPI food inflation (~3–5% annually post-2021). A basic grocery basket for one person (milk, bread, eggs, rice) cost ~300–400 ₪ monthly in 2020; by 2025, it’s ~450–550 ₪.
Current averages (Nov 2025):
- Milk (1L): 7.1 ₪
- Bread (500g): 9.5 ₪
- Eggs (12): 14.6 ₪
- Rice (1kg): 10.4 ₪
For a family of four, monthly groceries total ~2,500–3,500 ₪, up ~20% since 2020. Government subsidies on basics like bread helped mitigate spikes, but 2025 saw renewed hikes in staples amid global commodity pressures.
Dining Out and Restaurants: 30%
Eating out, a cultural staple, saw sharper increases during 2022–2023 tourism recovery. An inexpensive restaurant meal cost ~50–60 ₪ in 2020; now it’s 80 ₪. A three-course meal for two at a mid-range spot: ~400 ₪ (up from ~300 ₪). Cumulative rise: ~25–30%, with 2025 stabilization.
Utilities and Transportation: +25%
Utilities (electricity, water, heating for 85m² apartment) averaged ~600–700 ₪ monthly in 2020; now 860 ₪, a ~25% jump driven by energy costs (peaking in 2022).
Transportation remains affordable relative to Europe: A monthly public pass is 240 ₪ (up from ~200 ₪ in 2020), while a one-way ticket is 6 ₪. Taxis and fuel rose ~15–20%, with gasoline at ~7.5 ₪/liter in 2025.
Healthcare and Education
Universal healthcare via national insurance keeps out-of-pocket costs low (~200–300 ₪ monthly premiums), but private supplements add 500–1,000 ₪.
Public schools are free, but childcare/kindergarten averages 1,500–2,500 ₪/month per child (up ~15% since 2020). Finally, university tuitions are ~10,000–12,000 ₪/year for locals.
Overall Monthly Costs
For a single person excluding rent, costs rose from 3,200–3,500 ₪ in 2020 to ~3,930 ₪ in 2025 (covering food, transport, utilities, leisure). Including rent in a city center: ~7,000–8,000 ₪ total in 2020 vs. ~8,100 ₪ now.
A family of four: ~12,000 ₪ excl. rent in 2020 to ~14,000 ₪ in 2025; with rent, ~18,000–25,000 ₪ in Tel Aviv.
However, the average net salary (11,000–12,000 ₪) covers basics but leaves limited savings, with purchasing power holding steady.
In summary, while 2020–2023 saw rapid cost escalation (especially housing and food), 2024–2025 brought relief through cooling inflation and reforms like tax adjustments and utility subsidies.
However, Israel’s cost of living remains ~35% above what GDP per capita suggests, straining middle-class households. For expats or olim (new immigrants), peripheral cities offer 20–30% savings.
Israel’s Cost of Living Compared to OECD (2020–2025)
Israel’s cost of living stands out as one of the highest among OECD member countries, particularly when adjusted for its GDP per capita, which is below the OECD average.
According to the OECD Economic Survey of Israel (2025), the country’s comparative price level is among the top in the OECD, with a 35% gap between actual costs and what would be expected based on income levels— the largest such disparity in the organization.
This premium is driven by structural factors like import dependencies, housing shortages, and limited competition in key sectors such as food retail. While inflation in Israel has generally been lower than the OECD average since 2021, cumulative price increases in housing and essentials have widened the affordability gap.
Data from Numbeo (2025 Mid-Year) places Israel’s overall Cost of Living Index at 69.6 (relative to New York City at 100), higher than the implied OECD average of around 60–65 based on member country rankings.
Below, key categories using the latest available data up to mid-2025 are compared, focusing on national averages unless noted.
Inflation Trends
Israel experienced milder inflation than the OECD average during the post-pandemic surge, thanks to fiscal buffers and energy diversification. However, the OECD’s broader exposure to global energy shocks led to sharper peaks in 2022–2023.
Cumulative CPI inflation from 2020 to mid-2025 was approximately 13% in Israel versus 22% across the OECD. Annual rates (based on OECD and IMF data):
| Year | Israel (%) | OECD Average (%) | Key Notes |
|---|---|---|---|
| 2020 | -0.6 | 1.0 | Both subdued by COVID lockdowns; OECD slightly higher due to varied recovery paces. |
| 2021 | 1.5 | 3.3 | OECD rebound stronger amid supply disruptions. |
| 2022 | 4.4 | 8.0 | OECD hit harder by Ukraine war energy spikes. |
| 2023 | 4.2 | 5.8 | Israel moderated by subsidies; OECD food inflation peaked at ~10%. |
| 2024 | 3.1 | 2.8 | Convergence as global prices eased; OECD food up 3.9% YoY in Oct. |
| 2025 | 2.5 (through Oct) | 2.1 (proj.) | Stable at ~4.2% YoY in Sep for OECD; Israel’s war-related pressures linger. |
Israel’s lower rates post-2021 have helped preserve purchasing power relative to peers, but baseline prices remain elevated.
Housing
Housing affordability is Israel’s most acute pain point, with prices outpacing incomes more than in any other OECD country. The OECD’s aggregate house price-to-income ratio averaged 116.2 in 2024 (2015=100), indicating homes cost about 116% of annual disposable income on average.
Israel’s ratio reached 149.9 in 2024, meaning homes require nearly 1.5 years of income—over 28% above the OECD norm and the highest globally alongside Portugal and New Zealand.
Nominal house price growth in Israel averaged 8.8% annually from 2020–2024, compared to the OECD’s 6.5%. Rentals followed: Israel’s city-center 1-bedroom averaged 4,200 ₪ (~1,150 USD) in 2025, up 25% since 2020 and ~20% above the OECD average of ~950 USD (adjusted PPP).
Declines in OECD rentals (in 28 of 38 countries from 2019–2024) contrast Israel’s 5.4% rise to 4,717 ₪ monthly average in 2024.
Food and Groceries
Food prices in Israel are 52% above the OECD average, the second-highest after South Korea, per OECD data (2024). This stems from high import tariffs, concentrated supply chains, and post-2023 war logistics costs.
A basic monthly grocery basket for one (milk, bread, eggs, rice) costs 450–550 ₪ (125–150 USD) in Israel (2025), versus the OECD average of 90–110 USD. Cumulative food inflation since COVID: 46% OECD-wide versus ~35% in Israel, but Israel’s baseline remains premium—e.g., a dozen eggs at 14.6 ₪ (4 USD) vs. OECD ~2.50 USD.
For a family of four, Israel’s ~2,500–3,500 ₪ monthly outlay is 40–50% higher than the OECD norm.
Dining Out and Restaurants
Reflecting broader food premiums, restaurant meals in Israel cost 30% more than the OECD average. An inexpensive meal averages 80 ₪ (22 USD) in 2025, up 25% since 2020, compared to 15–18 USD OECD-wide. A mid-range three-course dinner for two: 400 ₪ (110 USD) vs. ~80–90 USD OECD. These disparities tie into the 52% food/beverage markup, with limited competition inflating service costs.
Utilities and Transportation
Utilities for an 85m² apartment average 860 ₪ (235 USD) monthly in Israel (2025), ~25% above the OECD’s ~180–200 USD, driven by energy imports despite diversification. Electricity (0.60 ₪/kWh) aligns with OECD highs like Denmark but exceeds the average of 0.20 USD/kWh. Transportation is more competitive: Israel’s monthly public pass at 240 ₪ (65 USD) matches the OECD average, though fuel at 7.5 ₪/liter (~2.05 USD) is ~15% higher amid global volatility.
Healthcare and Education
Israel’s universal healthcare system keeps core costs low, with premiums ~200–300 ₪ monthly versus OECD averages of ~300–400 USD (PPP-adjusted). Private add-ons push totals to ~500–1,000 ₪, still below high-cost peers like the US.
But education is cotsly again: Public K-12 free (OECD norm), but childcare at 1,500–2,500 ₪/month per child is ~10–20% above average due to demand.
Overall Monthly Costs and Affordability
Excluding rent, a single person’s basics cost 3,930 ₪ (1,075 USD) in Israel (2025), 25–30% above the OECD’s 800–850 USD.
Including city-center rent: ~8,100 ₪ (2,200 USD) vs. 1,800 USD OECD. For families of four: ~14,000 ₪ (3,800 USD) excl. rent, ~40% premium.
Numbeo’s indices highlight Israel’s strain: Purchasing Power Index 92.5 (below OECD ~110), underscoring the 35% affordability gap.
In essence, while Israel’s inflation has been contained, its structural price elevations—especially in housing (28% overvalued) and food (52% premium)—make it the OECD’s costliest relative to incomes, eroding middle-class resilience.
Data primarily draws from sources like Numbeo, the Central Bureau of Statistics, Worlddata.info, OECD, and Global Property Guide.