Today, the State Comptroller publishes the cost of living report, the preparation of which was completed before "Iron Swords." The reports reveal many failures that government ministers have not acted to correct and which are exacerbating the cost of living in Israel. According to the comptroller, the price level in Israel in terms of purchasing power is on average 27% higher than in OECD countries, and in particular, the gap in the food industry is even higher, standing at 37% compared to OECD countries and 51% compared to EU countries.
Office of the State Comptroller and Ombudsman
As of the end of the audit (February 2023), various markets and segments of the food industry are still fairly centralized. The comptroller found that the aggregate market share held by the ten largest suppliers in the food industry was more than 50% of the entire food and consumer goods industry, and that there are large price gaps in the food industry compared to prices in developed countries and EU countries (37%, 51%, respectively).
Nevertheless, the State Comptroller notes that in 2018-2022, the price committees in the food industry did not examine the addition of new products to the supervision, except for an examination of the level of competition in the whole wheat bread market. The Comptroller found that in the area of price enforcement of supervised food products, there was a decline in the number of enforcement files opened in 2021 (127 files) compared to the number of files opened in 2019-2018 (1,574). In addition, only 27% of audit files in which violations of supervision prices were found and transferred from the Enforcement, Trade and Measurement Administration of the Ministry of Economy to the Prosecutions Department in the Ministry of Economy matured into punitive measures. These figures may indicate a lack of effectiveness in enforcement.
Food products, photo: Ami Shumen
The audit also raised deficiencies in other areas, including: publication of reports by monopolists in the food industry, the time periods for regularly updating the prices of supervised products, the application of supervision of the price of whole wheat bread, and the effect of removing butter prices from "tight" supervision.
While uniform white bread is regulated, wholemeal bread, which is a healthier product, is not. The audit revealed that there is an 82% gap in the price of whole wheat bread in Israel (NIS 9.3) compared to the average price in the United States, England, New Zealand and Spain (NIS 5.1). The price of whole wheat bread in Israel, in terms of purchasing power parity, is the same as in the United States and about 66% more expensive than the average price in England, New Zealand and Spain.
Bread in Israel is 82% more expensive compared to other Western countries, photo: none
The average price gap between the prices of whole wheat bread (NIS 2.17 per 100 grams) and the prices of supervised regular wheat bread (NIS 0.84 per 100 grams) reaches 253%. It was also found that from the removal of "tight" supervision at the end of 2021 until the end of 2022, the average price of imported butter increased by 60%. This compares with a moderate increase in the price of a local protest of only 5.7%.
Comptroller Engelman recommends that the price committees and supervisors in the food industry increase their monitoring of the various markets, taking into account changes in consumer preferences in recent years, and that within product markets that lack competition and in which exceptional profitability is apparent, they focus on essential products with positive benefits for the consumer and society, such as health benefits and strengthening food security, such as wholemeal bread.
According to State Comptroller Matanyahu Engelman, "The cost of living in Israel skyrocketed even before the Iron Swords War, and 2024 began with additional price increases. The damage caused by the war to various sectors, combined with a high interest rate environment, makes it very difficult for Israeli households, including reservists who risk their lives for the State of Israel and many evacuees from the south and north. Alongside the "iron swords" war, the issue of the cost of living must be before the eyes of the prime minister and government ministers. In formulating the 2024 budget, the government must also consider the impact of the war on the issue of the cost of living in Israel and correct the failures that arose in the reports."
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