Adjust any Israeli shekel amount for inflation using the madad (CPI). Enter an amount, the base year, and the number of years of inflation to see the inflation-adjusted value in today’s shekels.
Enter an amount in ILS, the average annual inflation rate, and the number of years to see the inflation-adjusted purchasing power equivalent.
Inflation-adjusted value today
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Original amount
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Inflation rate used
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Purchasing power lost
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Your breakdown
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Understanding Israeli inflation and the madad
Israel experienced hyperinflation in the 1970s and 1980s, reaching over 400 percent annually at its peak in 1984, before a successful stabilisation plan in 1985 brought it under control. Since the 1990s, inflation has been moderate and broadly in line with developed-market norms, typically 1 to 4 percent per year. The Bank of Israel targets a range of 1 to 3 percent. The madad (Consumer Price Index) is published monthly by the Central Bureau of Statistics and includes housing, food, education, transportation, and other major spending categories. Housing costs have been the strongest driver of CPI in recent years as Israeli property prices rose sharply.
How CPI indexation works in Israeli contracts and savings
Many long-term financial instruments in Israel are CPI-linked. Galil government bonds pay a fixed real yield on top of CPI adjustment, protecting the principal from inflation. Some employer-sponsored provident funds (kupot gemel) offer CPI-linked tracks. Rental agreements in Israel sometimes include an annual madad clause, which can mean rent rising by 3 to 5 percent per year automatically. For salary negotiations, understanding the difference between a nominal raise and a real raise above CPI is important. A 3 percent raise in a 3 percent inflation environment provides zero real income growth.
Using this calculator for capital gains tax planning
The Israeli capital gains tax system explicitly uses CPI adjustment to compute real gains. When you sell an asset, the purchase price is inflated by the CPI change over the holding period before the 25 percent tax is applied. This means that assets held for many years in a moderate-inflation environment have a substantial portion of their nominal gain sheltered. This calculator lets you estimate how much an original cost basis would grow in CPI-adjusted terms, which is useful for estimating the taxable real gain before selling long-held securities or property. For precise tax planning, the Israel Tax Authority publishes official monthly CPI tables for use in tax computations.
Frequently asked questions
What is the Israeli madad (CPI) and why does it matter?
The madad is the Israeli Consumer Price Index published monthly by the Central Bureau of Statistics (Lishkat HaStatistika). It measures the average change in prices paid by urban consumers for a basket of goods and services. The madad is important in Israel beyond general inflation tracking: many Israeli salary agreements, rental contracts, bank deposits, government bonds (Galil bonds), and legal judgments are indexed (CPI-linked) to the madad. Understanding the madad is essential for anyone making long-term financial decisions in Israel, from negotiating rental contracts to planning retirement income.
What has Israeli inflation (madad) averaged in recent years?
Israeli inflation was low and stable from 2013 to 2021, generally running between 0 and 2 percent per year. In 2022, inflation spiked to around 5 percent as global supply shocks hit Israel along with most developed economies. In 2023 and 2024, inflation moderated back toward 2 to 4 percent annually as Bank of Israel interest rate hikes took effect. For long-term financial planning in Israel, using a 3 percent average annual CPI is a conservative and commonly used assumption. Use a higher rate (4 to 5 percent) for stress-testing. Data is available at cbs.gov.il.
How does the madad affect Israeli salary contracts and rent?
CPI-indexation (tzimud la-madad) is common in Israeli long-term contracts. Employers may offer partial or full CPI adjustments to salaries to protect real purchasing power. Rental agreements sometimes include an annual madad adjustment clause, which means rent increases automatically with CPI each year. Israeli government bonds (Galil bonds) pay interest on a principal that is adjusted to CPI, making them a hedge against inflation. If you hold a non-indexed salary or fixed rent, inflation erodes your real income or the real value of your rent over time.
How is the madad used in Israeli capital gains tax calculations?
Israel uses the madad to calculate the real capital gain subject to the 25 percent capital gains tax. The purchase price of an asset is multiplied by the CPI ratio (CPI at sale divided by CPI at purchase) to arrive at the inflation-adjusted cost basis. Only the real gain above this adjusted basis is taxed. This means in high-inflation periods, a larger portion of a nominal gain is sheltered from tax. The effect is most pronounced for long-held assets bought during periods of elevated inflation. The Israeli Tax Authority publishes the official CPI indices for each month used in these calculations.