Ten years after social protests in Israel, food manufacturers fear raising prices
Ten years after the Israeli summer of social protests, the outcry over the prices of cottage cheese and other foods can be considered a success, while the tented protest against high real estate prices has failed, according to a report by Chen Herzog, BDO Israel.
The spontaneous demonstrations of 2011 drew hundreds of thousands of demonstrators from all socio-economic and religious backgrounds to the streets to protest against the continuing rise in the cost of living. A sharp rise in the price of cottage cheese was one of the first sparks of the protests, and the subsequent decision by dairy companies to reverse the increase has boosted momentum for further protests.
Since then, Israel’s food price index has only risen by a tiny 1.8%, one of the lowest rates in the OECD, according to the report. The average OECD country has seen food prices increase by 16% over the past decade.
Factoring in the average 30% wage increase over the same period, the cost of food has fallen 28% over the past decade in relative terms, Herzog added. This is despite an increase in food expenses and an increase in restaurant visits and purchases of cooked meals outside the home.
The prices of almost every consumer product, including food, rose around the world this summer due to numerous supply chain issues and shortages. While similar inflation seems almost inevitable in Israel, economists note fear of backlash from food manufacturers and supermarket chains as they tiptoe around the problem, waiting for others to do so. the first step. With so many households still trying to make up for the losses they have suffered over the past year due to work stoppages and job losses, some believe the risks associated with rising prices may not be worth it. worth it.
âSocial protest has affected the competitive dynamics of the food market in Israel,â Herzog wrote. âOver the past decade, we have seen a decline in concentration in the food industry, the entry of new producers led by private labels and consumer pressure that has stopped the price of food from rising. food in Israel.
Meanwhile, house prices have gone in the opposite direction, rising an average of 52% in Israel over the past decade, with no end in sight. This rate is more than double the 22% increase in house prices in Europe, the report notes. The rise is even larger when you consider that house prices in Israel did not collapse during the 2008 financial crisis as they did elsewhere.
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Israel’s new government has made lowering housing costs and increasing affordable housing options one of its key goals for the coalition, even as the market suffers from a lack of supply. The Israel Land Authority (ILA), the government body responsible for managing land use in Israel, has not made any new land available for construction – and the problem has actually worsened, not improved. , over the past five years.
New Housing Minister Ze’ev Elkin has said he wants to add 300,000 units to the housing market, but with just over 50,000 currently approved each year, this will require a considerable effort.
“Without long-term planning and a significant increase in the volume of housing starts, we are now creating the seeds of another social protest for an entire generation that has not had the opportunity to buy an apartment,” concludes the report.