Economic Affairs Committee Discusses Increase in Food Prices

​The Economic Affairs Committee, chaired by MK David Bitan (Likud), convened on Monday for its first meeting in the new Knesset, which was dedicated to the increase in food prices and its effect on the cost of living in Israel.

Committee Chairman MK Bitan said that just as he had worked to raise the disability benefits, he would do the same with regard to the price increases. “With all due respect to the government, if we will be convinced that we have to take action for the benefit of the Israeli consumer, we will,” he said. “I don’t blame anyone for anything, and it ​is clear to me that the government must put its hand in its pocket and that the manufacturers have to make a profit; no one has to lose. But on the other hand, we have to care for the consumer, and everyone else.”

MK Shalom Danino (Likud) addressed the increase in the benchmark interest rate and said that while the governor of the Bank of Israel promised that things would be difficult at first and get better with time, he is not certain that many young couples will succeed in completing this “journey.” He called to prevent the interest rate issue from being “solely in the governor’s hands.”

Finance Ministry official Galit Ben Naim mentioned that in 2020, small suppliers had a hard time importing goods due to the corona crisis, while the major suppliers got stronger. According to her, the figures from 2021 show no change in profitability, and the suppliers’ argument that there is no other choice but to increase prices is baseless.

Ron Tomer, President of the Manufacturers’ Association of Israel, said that between the years 2013 to 2021, food manufacturers reduced prices for retailers by 7%, and the state needs to check why this reduction did not reach the consumers. The Food Law, he noted, does not permit manufacturers to determine a suggested price for consumers. He also mentioned that the current price increases are the result of the spike in the price of raw materials, electricity, water and property tax since the beginning of 2020, and he praised the recent measures taken by the Prime Minister and Finance Minister to curb the price hikes.

Rami Levy, owner of Rami Levy Hashikma Marketing, called to decrease regulation. For example, he said, Israel should cancel the duty to display prices, and lower tariffs. MK Michael Biton (National Unity Party) argued that canceling the duty to display prices would hurt the weak and would not lower prices. There is no competition among the supermarket chains, he said, adding that the Competition Authority, which has been authorized to impose a NIS 100 million fine, has yet to do so. Rami Levy interrupted MK Biton, who responded by saying “Rami Levy [does not run things here], even if he is a Likudnik. We will be a fortified wall for the good of the consumer.”

Lobby 99 CEO Linor Deutsch said that when commodity prices around the world dropped from 2012 to 2020, this did not lead to price reductions in Israel, but when commodity prices increased due to the corona crisis, this was immediately passed on to the consumer. “There is a market failure here, and overregulation, and when there is no competition, it is easy to pass price increases over to the consumer, and a consumer boycott is not enough,” she said.

Towards the end of the meeting, Bitan said he has yet to receive an answer as to how the prices for the consumer can be lowered, and added: “I won’t let the Treasury do its usual trick where it lowers in one place and increases in another. They need to put their hand in the pocket.”

Summing up the meeting, Chairman Bitan said, “We will hold a number of meetings, until we learn the issue, and I hope that – unlike the past – we will succeed in reducing prices. I am not looking for guilty parties, I am looking for solutions.”