While government ministers squabble with finance officials over the budget, your breakfast is getting more expensive, the self-employed reservists are collapsing, and the end of the economic crisis is nowhere in sight. At the same time, the bloated government continues to extravagantly distribute political funds as if there is no tomorrow, and imposes more and more decrees on the public. This is, by and large, the story that has accompanied us in recent months.
The debate on the state budget, photo: Prime Minister's Spokesperson's Office
Israel's largest food companies recently announced price increases, including the large importer Shastowitz and legume producer Sugat. On Monday, food manufacturer Strauss announced that it would also significantly increase the price of its products. Strauss's move, of course, is liable to encourage giant companies such as Osem, Tnuva and Diplomat to raise the prices of their products, and as a result lead to a tsunami of price increases during the war.
The companies explain the price increases by the increase in the prices of raw materials around the world, and no one will argue with them, after all, no one will go and check how much cocoa pulp has increased in Ghana or Ivory Coast. Thus, at the most unfortunate time for Israeli consumers, the wave of price increases in the economy is gaining momentum.
Strauss also makes its products more expensive, Photo: Ancho Ghosh/Gini
During the war, there is no one to cry out for the public
Unlike the previous wave of price increases, which took place only last year, this time apart from a few newspaper headlines, the companies enjoy complete public quiet and a lack of opposition. The minister in charge did not send letters demanding that companies retract the price increases, the Histadrut does not demonstrate in the streets, and the public does not cry out. He has many other things on his mind, such as demonstrating for the release of the hostages. With more than a hundred abductees held captive by Hamas, and murderous attacks on a regular basis, it is understandable why demonstrations over the price of chocolate milk do not concern the public.
Therefore, there is no one to cry out to consumers, and the problem is that the end of the price increases is not in sight. Companies that raise prices, by the way, also have a great excuse: the government itself increases the cost of services under its supervision such as fuel, electricity, water and municipal taxes. Moreover, not only is the government not shrinking, but during this period there are 38 ministers, probably an all-time high. Each minister has a bureau and staff, all without addressing the budgets that are being channeled and the coalition funds. Speaking of coalition funds, only a third of them have been cut, all the rest remain. These billions of shekels are channeled to increasing the allowances of the elderly, whose budget is now higher than ever and estimated at NIS 1.7 billion, to haredi education and considerations. It should be said that the government did cut the budgets of government ministries, but not enough.
Bank of Israel Governor Amir Yaron (archive), photo: Oren Ben Hakon
In order to cope with the enormous costs of the war, the government is forced to impose many decrees on the public, including an increase in VAT starting next year. Economists estimate that the move will raise the level of inflation by about 0.4 percent, meaning that the interest rate will not decrease as expected. There are no free meals, the governor said, and he was right.
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