Get your wallets ready: 2024, which began with Hamas firing rockets at the center and south, brings with it considerable increases in the prices of some goods and services, after gas prices jumped by about 4% just yesterday.
The municipal tax rate will increase by about 2.7 per cent, and from 1 February, the electricity tariff is expected to increase by 2-3 per cent (the Electricity Authority is expected to announce this later this week). All of these not only directly increase the average household's expenses, but also affect manufacturers and suppliers in Israel, who are liable to roll over the increase in consumer spending.
Without government intervention, the price increases, which are not yet too noticeable, could snowball and turn into a real wave.
The giant importer Shastowitz announced on Tuesday that from February it would raise the prices of its products by an average of 10%. This is despite the fact that the dollar has fallen by more than 6% in the past three months. The company said the price increase had been planned a long time ago and was postponed due to the war.
Refueling (illustration), photo: Yehoshua Yosef
The price increase includes toiletries and food products from the Colgate, Ajax, Palmolive, Barilla and Master Chef brands, among others, and will apply to about 15% of products. It should be noted that Shastowitz raised prices by up to 15% last May.
Yesterday, Sugat, the largest food producer in the legume sector, announced a price increase of between 5% and 10%. This increase includes some of the company's products and can reach up to 40%. The company's products include: legumes, white sugar, brown sugar, demerara sugar, and yeast flour. Part of the increase will take effect on 14.1.
Raw prices soared
According to industry estimates, another giant importer that can announce a price increase is Diplomat, which also postponed price increases due to the war. The company's products include those from many popular brands, such as Heinz, Pringles, Starkist Tuna, Jacobs Coffee, Kellogg's, Milka Chocolate, Oral B and Fairy.
Recall that Diplomat announced last September that it would raise its prices by 15%. The company claimed that most of the products intended for price increases are those that have not risen until then. The planned price increase was supposed to include a 4.01% increase in toiletries and 3.37% in food.
Diplomat Products, Photo: Joshua Yosef
Olive and pickle producer Beit Hashita notified retailers of an increase in the prices of olives by about 15% and pickles by about 5%, and Yachin also announced price increases of 10% to 12% in some of its products, such as canned tomatoes, corn, chickpeas, fava beans and beans.
Uri Shai-Levy, CEO of Beit Hashita Industries Ltd., explained to us: "Raw material prices do not stop rising. Olive prices have risen by more than 50 per cent due to local and global shortages. Unfortunately, as a manufacturing enterprise in the Land of Israel, we are unable to absorb all the increase, so we are forced to raise prices."
Expected decline in GDP
Chen Herzog, chief economist of consulting firm BDO, told Israel Hayom: "2024 begins with a wave of price increases, despite the global trend of declining inflation and the economic slowdown. Most of the price increases this year are the result of price increases from last year, the revision of which was artificially postponed."
Chen Herzog, Photo: Nati Hadad
Herzog estimates that the economic impact of the price increase comes against the background of the expected decline in GDP, and the situation in which the Israeli public has to bear the cost of the war, which is expected to reach about NIS 200 billion – about NIS 65,<> per family in Israel.
"At a difficult time for the Israeli consumer, we are paying today the price of not dealing with the fundamental problems of the Israeli economy over the past year. A significant portion of the price increases, such as the increase in gasoline prices, municipal taxes, and more, reflect a belated revision of last year's price increases. This means that while prices around the world are falling, we are seeing an increase. Therefore, the increase in prices does not necessarily reflect an increase in inflation in Israel, especially against the background of the slowdown in the economy and the decline in demand due to the war."
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"Prices won't go up"
Will all the price increases be passed on to the consumer? Not sure. At least Good Pharm said that at the moment a wave of price increases is not expected: "I don't think that in our areas a wave of price increases is expected, I don't see an economic justification for it," Adam Friedler, CEO of Good Pharm, told Israel Hayom. "I don't see price increases in Europe, and currency rates are relatively favorable. The shipping prices, except for the story with the Houthis, are affordable, so I see no objective reason for a substantial change.
"The zeitgeist is terrible, and you can't raise prices when the whole nation is broken. The people are experiencing difficulties beyond the economic difficulties, which are self-evident."
Asked if a wave of price increases is expected following the announcements, a source in the food chain industry said: "I don't expect a wave of price increases to meet us as it did in 2023. Relatively speaking, foreign currencies have balanced, and even if there is raw material that has become more expensive, the currencies will cause a balance in the need to increase the price.
A member of the Houthi security forces in the background of a ship in the Red Sea, photo: AP.
"Another factor that can have an impact, and is still not directly felt, is the cost of shipping by ship. The price of freight has tripled in the past two weeks, and it is possible that the prices of products arriving here within 35-60 days will be affected by events at sea. You have to remember that not every product comes as a finished product, sometimes it is imported as raw material, so its price is greatly influenced by what happens," he concludes.
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