Israelis are generally aware that they routinely pay more for consumer goods than their counterparts in Europe. Yet, they may well be shocked by how much more they are paying, according to data just released by the Ministry of Finance.
The ministry’s chief economist, Yoel Naveh, concluded in his report that prices in Israel are higher, often by tens of percentage points, than in corresponding sectors of OECD member countries. The most glaring price differentials were found in the transport, hotels and electrical products sectors, Globes said on Monday.
The chief economist says that price differences between Israel and other developed countries are as much as 52 percent for durable goods such as cars and electrical products, 30 percent in transport and 29 percent in restaurants and hotels.
GDP per capita in Israel is about $3,200 annually, which puts Israel in 20th place among OECD countries, just behind France.
However, when comparing GDP per capita in terms of purchasing power (PPP), Israel was three places behind Italy, Spain and the Czech Republic. The difference was blamed on the relatively high prices in Israel.
The only prices that are relatively low in Israel are in telecommunications, fruits and vegetables, and education.
Not surprisingly, Naveh suggested, as have many other economists, that the prices can be lowered by promoting more competition in the affected sectors.