Israel shifts from war to recovery; focus shifts to September CPI

ISRAEL - In Brief 13 Oct 2025 by Sani Ziv

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OverviewThe 20 live hostages were released and returned to Israel this morning, after two years in Hamas captivity, as part of the first stage of the ceasefire agreement. In parallel, Israel began releasing Palestinian prisoners. U.S. President Donald Trump, widely viewed in Israel as the key broker behind the end of the war and the hostages’ release, arrived in Jerusalem and delivered a speech in the Knesset, emphasizing US’s commitment to achieving a “real and lasting peace” between Israel, the Palestinians, and the broader Arab world. It remains difficult to assess the feasibility of Phase II of Trump’s plan, which depends on significant U.S. commitment to sustaining the process, as well as Israel’s willingness to engage in a long-term framework that could ultimately lead to the establishment of a Palestinian self-governing authority in Gaza and the West Bank. The next phase is also contingent upon Hamas’s readiness to relinquish control of Gaza and end its military confrontation with Israel. Following the release of the hostages - which coincided with the second part of the Sukkot holiday, Israel will return to full business activity on Wednesday, when attention will shift back to economic matters and, most notably, the release of the September Consumer Price Index (CPI). CPI Preview – September The September CPI is expected to show a decline of around 0.3%, mainly due to seasonal factors. The main drivers will likely be a 9% drop in overseas travel prices, alongside a decline in domestic tourism prices following the August peak. Additionally, food and housing prices, the main contributors to inflation in recent months, are expected to increase by only 0.1% and 0.2...