It is only getting more difficult: the wave of price increases in the economy did not pass over in almost any area of the year, and families throughout Israel felt the cost of living very well in their pockets - from food and toiletries, through electricity, water and fuel to astronomical apartment prices and mortgage prices.
Soon many around the world will celebrate the beginning of the new civil year, but one thing that certainly cannot be celebrated are the expected decrees in all basic consumption areas, which are on our way towards 2023.
We asked the experts: by what percentage are various consumption areas expected to become more expensive during January?
Well, price increases can reach up to 8% during the coming month of January.
According to Chen Herzog, the chief economist of the financial consulting firm BDO, "the wave of price increases expected in January 2023 mainly reflects the effect of the increases in the prices of raw materials in the world, which are reaching Israel with a delay. In light of the continued price increases, which are mainly due to the increase in global prices and the increase in interest rates, the challenge of the incoming government is In formulating a price policy that will allow the cost of living to be reduced through real structural changes and not the import subsidy, which is not a root solution to the problem.
"The Israeli economy enters the year 2023 without a budget, and operates with the continuation budget formulated even before the war in Ukraine. This means that until a new budget is formulated, the state operates with a budget that is not adapted to the current reality of price increases in the prices of imported inputs, high interest rates and a slowdown in economic activity. That is why it is important To formulate a state budget as soon as possible, which will enable the acceleration of growth in the economy along with reducing the cost of living."
New apartments in Rosh Ha'Ein // Photo: Yehoshua Yosef,
Everyone is raising prices
Herzog explained some of the reasons for the expected price increases in January and said that "the 8.2% increase in electricity prices is due to the increase in coal prices in the world, but also from the government's failure to comply with the decision to close four coal-fired power plants in June 2022. In order to reduce electricity prices, the new government needs to formulate An emergency plan to accelerate the cessation of the use of coal and energy independence."
Much has been said about food prices which have risen sharply in the past year, a wave that has intensified in the past two months with price increases by many suppliers such as Unilever, Tnuva, Strauss, Terra, Gad and more.
On January 1, a price increase is also expected in Asem and Bozolobek.
According to Herzog, "The increase in the prices of food products reflects an increase in food prices in the world. In Israel, the expected increase is at a rate of about 5%. In the world, this has already happened in the last year, and this increase is coming to us late, only in 2023, at a time when the world is beginning to trend downward in the prices of goods, wheat, corn and other goods".
Regarding the price of water, which is expected to increase by 3.5%, Herzog said that this increase "is due to the increase in electricity prices as well as due to the increase in indices, prices, wages and inflation. The increase in fuel prices is due to the abolition of the excise tax subsidy, and it seems that until January 1st they will not be able to extend The same. Now the question of the excise tax subsidy policy is placed at the doorstep of the next finance minister."
Bank of Israel.
Will fight the high prices?, Photo: Oren Ben Hakon
The Bank of Israel is alone in the campaign
The increase in interest rates has a dramatic effect on mortgages, as each fluctuation can affect the cost of the mortgage by hundreds of shekels per month.
According to Herzog, "In mortgages, it can be said that the increase in interest rates, which is intended to fight inflation, actually paradoxically causes an increase in the cost of living, because it makes mortgage payments more expensive and also indirectly increases rent prices.
"In recent months, the governor of the Bank of Israel has been alone in the battle over housing prices, and it is hoped that the new government will come up with a policy to deal with housing prices and inflation, in a way that will allow the Bank of Israel to change policy in a gradual manner, and towards the end of 2023 to lower interest rates."
Positive news
And there is also another positive line - in the field of toiletries there is actually a 5% decrease expected this year.
According to Adam Friedler, founder and CEO of Good Pharm, "After the rising price trend in 2022, I foresee a trend reversal towards 2023, where we may even see a drop in prices.
The adaptation to the situation in Russia, a drop in freight prices, a slowdown in consumption and a drop in the price of raw materials may reverse the trend."
Another decree is related to the world of car insurance.
If it is not enough that the prices of vehicles have risen significantly this year, the insurances are also becoming more expensive.
According to Shay Sade, chairman of the General Insurance Committee at the Chamber of Insurance Agents, "Compulsory insurance is going to become more expensive by at least 10%, because there is an automatic distribution of funds between the insurance companies and the National Insurance.
Those who take care of accident victims are the health insurance funds and the hospitals, so the rationale is that a percentage is transferred to the National Insurance even if we did not have an accident.
"Regarding the comprehensive insurance - the increase that was in 2022 will continue in 2023 due to a severe shortage of spare parts. As a result of this shortage, there is a black market for spare parts and there are vehicle thefts."
The rent will go up
In the field of real estate, we certainly do not expect any relief for our pockets. This year, apartment owners raised the rental prices at a dramatic rate, and in 2023, an increase in rental prices of about 5-10% is expected. According to Yad2 data, in December there was an increase of 27% -1% of the average rental cost.
According to Dror Obeh Zion, CEO and owner of the real estate marketing company Dara: "The rent is rising on average nationally and in most cities in a targeted manner. The main reason is that the rental market is indeed different from the market for apartments to buy, but when prices go up in one, it often affects the on the second market.
"Apartment prices in Israel have jumped by more than 20% in the last year, and combined with the increase in interest rates, many buyers who were undecided turned to the rental market.
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