In the video: are we preparing for the coming?
Shoppers are stocking up and emptying the shelves of writers/Ruben Castro
During the last quarter of 2023, in the shadow of the Gaza war, the shekel strengthened against the dollar by 5.2%, against the euro by 1% and against Israel's main trading partners, the shekel strengthened by 2.8%.
The obvious immediate conclusion is that the decrease in the value of the world's currencies relative to Israel should lead to a decrease in the prices of goods in Israel, and it is not, the prices actually climb unhindered.
There is no law and no justice, the hands of the government have failed as well as its ability to bring about a serious discussion on the issue.
It is already difficult to hide the shame of the economic ministries in Israel, which fail to comply with the civil order, the one in whose name the Israelis, Jews, Druze and Bedouins fight and fall into space and are injured, while their families in the home country and the rest of your people Israel groan under the burden of rising food prices while their incomes shrink or their businesses close and close.
The importers and traders claim that there were price increases abroad and therefore it is justified to impose those price increases and pass them on to the Israeli consumer. Let's examine the claim.
To this end, we examined what happened to the real exchange rate between Israel and its trading countries, that is, the exchange rate minus inflation between Israel and the trading countries Hers. Well, a surprise: the shekel strengthened in real terms in the last quarter of 2023 against the basket of currencies at a rate of 2.6%!
This means that there was room to reduce the retail consumption basket in the food sector on average by this rate - and certainly not to raise prices.
Food.
There was room to lower the consumption basket, and certainly not to raise prices/Maya Tischler
at the expense of the public
Here I will tell you a secret about Israel's importers and traders: if they are successful in business, they are entitled to a bonus in the form of raising prices at the expense of the public and pocketing the profits.
If the merchant loses, then a correction must be made, also at the expense of the public, how?
In the third quarter of 2023, before the war, we lived in relative peace, although there were demonstrations against the government and there was fear of division in the nation, but the Israeli economy was very strong, among the strongest in the world.
In the third quarter of 2023, the dollar strengthened against the shekel by 3.4% and the euro strengthened by 0.9%.
The business sector (there is no detail regarding importers of food and raw materials for food) and the merchants, rushed to sell in the markets a net amount of 3.2 billion dollars for shekels, received more and more shekels for foreign exchange. The Israeli currency created from foreign exchange was used for investments in Israel, to pay wages and to pay taxes at the same time to increase profit.
Then came the damn war, the unknown was upon us and panic gripped the food importers and traders.
The importers do not know very well the ins and outs of the Israeli economy nor the strength of the Israeli economy (what is more, it has been systematically slandered for months by self-interested media).
The business sector relevant to our case apparently does not understand the significance of Israel's huge foreign exchange reserves, does not understand the essence of Israel's current account surplus, nor has it assimilated the responsibility and capacity of the Bank of Israel.
A natural solution
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Governor of the Bank of Israel Amir Yaron.
The announcement helped and the devaluation stopped/crossed
The rush to the dollar and foreign exchange in the fourth quarter of 2024 caused a massive net purchase of $5.2 billion by the business sector, that is, from the sale of $3.2 billion to the purchase of $5.2 billion within a quarter.
It is true that initially, after the massacre in the settlements around Gaza, there was a devaluation of the shekel Against the dollar (between the outbreak of the war on October 7, 2023 and October 27, 2023, the dollar appreciated by 5.6%), but within a relatively short time, the shekel actually began to strengthen at the same time as the maneuvers and the war deepened, especially after the Bank of Israel announced that it would allocate $30 billion to intervene in the market the foreign exchange, in order to prevent a shortage of foreign currency and of course to prevent a panic of devaluation that could lead to inflation.
The announcement of the central bank was enough: the devaluation stopped, when in practice the Bank of Israel sold only 9 billion dollars. Between the peak price of the dollar on October 27, 2023 and At the end of 2023, the dollar weakened against the shekel by 9%, yes nine percent. Yes, the appreciation of the shekel continued and continued even after the Bank of Israel stopped intervening, the shekel continued its upward trend. During the month of January, the dollar strengthened against the shekel by a marginal rate of 0.2% and the euro weakened by -1.8%. That is, the shekel strengthened contrary to expectations.
What will the importers and traders do with the excess foreign exchange they purchased, excess foreign exchange that melts in their hands and loses its value compared to the Israeli currency, in which trade takes place all the way to the retail and from there to the last consumer?
Here is a creative solution for the importers and traders.
Why won't prices go up?
Is there by chance one announcement after another about increasing food prices, one importer and one manufacturer after another?
After all, it is forbidden to coordinate price increases...
That way, at the consumer's expense, the food importers and traders will compensate themselves for the bad bet of an influx of foreign exchange with the outbreak of the war. The failure of the bet is the importers' and traders', but the payment is at the expense of the households, what's easier than that ? When the merchants are asked why they raise prices, they blame the shekel's devaluation as one of the factors. This is a lame lie, but they insist on pumping it into the public's ears: devaluation, devaluation, devaluation, as if anyone believes.
Dairy products.
World prices will drop by about 17% in 2023/Omer Miron
eat more
The central bank, the Bank of Israel, decided to discuss and analyze analytically the changes in prices in the food industry, with the exception of vegetables and fruits.
The bank admits that it is difficult to learn about the changes in prices from previous rounds of military operations between Israel and its neighbors, or to draw conclusions from the Corona period.
The bank examines several aspects, among them: the structure of demand, the structure of costs and the intensity of competition.
The bank states that most of the factors are now acting in the direction of upward pressure on food prices, which causes a 2% increase in the prices of the Israeli food basket in the weeks since the outbreak of the war.
In the work done at the central bank, the effect of the level of demand, the effect of demand flexibility and the possibility of diverting demand from the private to the public sector were examined.
The war atmosphere leads to a reasonable reduction in demand in most sectors of the economy, the public's desire is limited.
Some of the regular consumers of peacetime are at least in the reserves.
The food industry is immune to the effects of the war and there is even a tendency to increase consumption due to the public's stocking up (which will be at home).
The public today tends to eat more at home as an alternative to catering outside the family nest. The increasing domestic consumption is measured by the consumer price index measured by the Central Bureau of Statistics, but is not measured when it comes to In feeding at events, such as in reserves.
While relatively weak groups will tend to consume less and are detracted from the demand situation due to the war, the powerful groups, who are not interested in the price, influence an increase in the price, even though, overall, for the entire economy it is sometimes a decreasing volume of consumption.
The powerful urban groups with high incomes will continue to purchase in expensive neighborhood stores and invest less resources in the search for discounted alternatives, according to the work done by Bank of Israel economists.
Compared to the urban and powerful, those who went on unemployment or were laid off, will look for cheap alternatives due to fear of continued loss of income. The relatively weak will invest time, which they currently have in abundance, in order to save money.
Another factor in the increase in food prices is the enormous amount of governmental, public demand for food Hundreds of thousands of soldiers and evacuees. Due to the huge quantities that the government buys, it can get discounted prices, but there will be cases where, due to the urgency of the supply, the government will pay more.
author.
Where did the obligation to mark the prices go and why is it not enforced?/Reuven Castro
Another possible factor that pushes food production costs up is the lack of workers, some of whom are recruited, which also affects the availability of partners (usually women), who are forced to expand the scope of "working hours" in the family unit, at the expense of working hours and overtime at the workplace.
The supply of work in the logistics system of the food companies has also been affected as a result of the recruitment, this is in addition to the fact that part of the productive activity in the food industry is on normal days in the areas that are currently exposed to conflict with the enemy.
The labor supply is also affected in the retail segment of food sales, the central bank says.
In general, states the Bank of Israel, the situation of the big businesses is better than that of small suppliers, for whom an increased mobilization of reserves could actually harm the activity or the distribution possibilities of the produce, compared to the truck fleets and logistics set-up of the large manufacturers.
There is a worrisome phenomenon, the state of emergency "provides the connections in which contact is allowed between major players in the economy and these may coordinate their activities in a way that harms competition" so says the Bank of Israel in these words, but the level of public and regulatory attention to competition problems may be very limited during an emergency.
An example of the government's laxity with the retailers is the ongoing truce on price marking.
At the beginning of the war, the retailers claimed that they did not have the manpower to put a price tag on the products, let's say, but why does the Ministry of Economy continue to allow this today at the beginning of 2024?
Did they have enough time to find replacement workers who are not conscripted, members of minorities (some of whom may have been afraid at the beginning of the campaign, but they returned to circulate among the Jewish population), new immigrants or retirees?
Consumers go to the supermarket and find themselves at the counter: not only is there no price on the products, in many cases there is no price tag on the shelf at all.
madness?
The only tool left by the "Consumer Protection and Fair Trade Authority" in the hands of consumers is guesswork.
How much this or that product costs, there is simply no tool to estimate and no tool to measure or compare.
If this basic tool is taken away from the public, it certainly allows price increases that are hidden at first and visible later.
Shekels and dollars.
There is no devaluation of the shekel but rather an appreciation, so what are we missing?/Reuven Castro
The permission is given
Please note, the "Consumer Protection and Fair Trade Authority" officially announced on October 17, 2023 that the exemption it gave due to the war from price marking will expire on November 8, 2023, the Authority also announced that the directive is not a routine directive.
Two months have passed since it was mandatory to go back and mark prices, and the enforcement of the authority regarding price marking simply evaporated.
It is true that there is no devaluation of the shekel but rather an appreciation of the shekel (in recent months), so what are we missing?
Maybe food prices are skyrocketing in the world and overshadowing the appreciation of the shekel?
What is happening to prices in the world?
Here is the answer: according to an official index of food prices published by the United Nations, the index decreased in January this year by 10.3% compared to January 2023, sugar prices decreased by 6.7%, meat prices decreased by 4.3%, dairy product prices decreased by 3.9% and the price of edible oil decreased by 3%.
Let's go deeper, measure a whole year against a whole year. After all, we must be fair to the food importers and traders, so we will examine an average against an average. If we examine the entire year 2023 according to the World Food Price Index of the Compared to the 2022 average, we will find that the picture remains difficult for the consumer in Israel.
The index (on average) of food prices in the world between 2023 and 2022 decreased by 13.8%, the price of edible oil decreased by 32.7%, the price of dairy products decreased by 17.3%, cereal prices decreased by 15.4% and the price of meat decreased by 3.5% .
We will continue to be fair to the food importers and traders, the dollar became more expensive in 2023 on average compared to the 2022 average at a rate of 9.8%, therefore we must deduct the drop in food prices in the world from the increase in the dollar in Israel, average against average, in order to be on a uniform line.
Well, even then: food prices fell on average in the world in 2023 compared to the 2022 average, in shekel terms, neutralized from the dollar, by 5.4%, a shame.
But there is nothing to worry about, Economy Minister Nir Barkat has announced again and again that "the celebration is over" and that he will fight the food companies and even announced that they were called to the "reprimand" talks... Oh for that reprimand, if in their panic the food importers and the food companies continue to raise prices and celebrate.
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supermarket
Cost of living
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Gaza war
will come