Indexed tracks (Katz, Matz, the indexed reset tracks and the Zakaut loan) link the principal to the Madad: if the index rises 0.3% in a month, the balance rises 0.3%. Non-indexed tracks (Kalatz, Prime and the non-indexed reset tracks) are not affected, although their rates reflect what the market expects from inflation.
Because the balance follows the index, inflation matters more than it first seems. In the early years, when each payment repays little principal, the balance can stay flat or rise. To compare an indexed track with a non-indexed one you need an inflation assumption; the latest index and the inflation forecast used by Ribit are on the rates page.
A second cost is on early repayment: on an indexed loan repaid between the 1st and the 15th of a month the bank may charge half of the average change of the last 12 published indices, multiplied by the amount repaid. Repay in the second half of the month.
Example
You owe ₪1,000,000 on an indexed track and inflation is 2% over a year: the Madad adds about ₪20,000 to the balance on top of the interest. If the same balance were on a non-indexed track, those ₪20,000 would not be added.