The summer months are going to cost the citizens of Israel a lot of money. The prices of food and basic consumer goods have already soared, and the depreciation of the shekel, if it continues, is liable to further increase inflationary pressures and make imported goods and vacation prices even more expensive. In addition, rental prices are expected to continue to increase this summer.
About 15 large companies in the economy – the largest manufacturers and importers of food and toiletries – announced price increases on their products in May.
Some of the increases have already taken effect and some will go into effect in June. This is a significant rate of increases ranging from 4% to 25% (yes, this is the maximum rate of increase of products imported by a diplomat).
The wave of price increases in the economy is so significant that even the most "intelligent consumers" among us, those who check prices and make comparisons, will feel it in their pockets, since even the most basic food products, such as supervised dairy products and bread, have become more expensive under the auspices of the state.
If the increase in the price of the basket of food and consumer goods is not enough, the depreciation of the shekel, if it continues, will increase the prices of vacations abroad and may further increase the prices of imported products. At the same time, household expenses during the summer months and summer vacations are higher than the annual average due to expenses for children's summer camps, vacations, attractions, extensive use of air conditioners, etc.
Those who live in rentals and are looking for an apartment during the summer months may be surprised by the rising rental prices. The demand for rentals in the summer month indicates that most apartment moves are carried out during this period - students are looking for apartments and families with children are more comfortable moving in the summer because of the summer vacation. Even before the seasonal increase in demand, monthly rents for new renters jumped by about 9 per cent, according to the latest data from the Central Bureau of Statistics for April.
The government's measures so far have not been significant
Raising the interest rate in the economy increases the cost of loan repayments and mortgage repayments in the economy, increases monthly expenses and reduces the purchasing power of many.
The steps taken to date by the government regarding the wave of price increases have not been significant, and they included, inter alia, an appeal by Economy Minister Nir Barkat to the largest companies in the economy requesting that they disclose their financial statements, as well as a request by the minister to the Commissioner of the Competition Authority, Michal Cohen, to resign from her position.
Shoppers in Mahane Yehuda, Photo: Yoav Ari Dudkevich //
The food market in Israel is characterized by excessive concentration – onerous regulation and the power held by monopolies make it difficult for new competitors to enter this market and increase competition. Last week, the government decided to establish a public committee that will recommend, within three months, steps that will lead to the dismantling of monopolies and food giants, which today constitute a significant component of the cost of living.
Finance Minister Smotrich, photo: Paul Jonathan Zindel/Flash90
In an interview with Israel Hayom, Finance Minister Bezalel Smotrich pledged: "We will now enter the issues of monopolies and concentration as strongly as possible. I, as a right-winger who wants a free market, don't like to interfere in the market, but our job as a government is to allow conditions of real competition in a free market, and for that we have to dismantle monopolies built over decades. There are monopolies here under the auspices of the law, they built regulatory worlds for years that ultimately served those players who were strong. We will start with food, move on to medicines and other sectors that are centralized, dismantle them and open the market to competition," the Finance Minister pledged.
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