A dairy display section in an Israeli supermarket chain

Israel's Food Prices Soar: Second Highest Among Developed Nations

Details
The Judean Staff
Finance

In a startling revelation that underscores the economic challenges faced by Israeli consumers, recent data from the Organization for Economic Cooperation and Development (OECD) has highlighted the nation's exceptionally high food and beverage prices. According to the June report, Israel's food prices are a staggering 52 percent above the average of developed countries, positioning it second only to South Korea.

Bread and Grains: A Costly Staple

The cost of bread and grains in Israel is particularly alarming. These basic necessities are priced 49 percent higher than the OECD average, trailing only Switzerland. This means that the simple act of buying bread has become a significant financial burden for many Israeli families.

Dairy and Eggs: Luxuries in Disguise

Israeli dairy and eggs are also among the most expensive globally. Prices in this category soar to 64 percent above the average, with only South Korea recording higher costs. This makes everyday items like milk, cheese, and eggs feel more like luxuries than essentials.

Fruits and Vegetables: The Price of Freshness

Despite being a cornerstone of Middle Eastern cuisine, fruits and vegetables in Israel come with a hefty price tag, 25 percent above the OECD average. This places a strain on those striving to maintain a healthy diet amidst rising costs.

Meat: Premium Prices

While there are three countries where meat is more expensive than in Israel, the nation's meat prices are still 64 percent above the OECD average. This places a significant financial strain on households seeking to include protein-rich foods in their diets.

Beyond the Plate: Car Prices Skyrocket

The financial strain extends beyond groceries. Car prices in Israel are 52 percent higher than the OECD average, marking the highest increase among all member countries. This exacerbates the cost of living crisis, affecting everyday mobility and transportation expenses.

A Silver Lining in Telecom

In contrast to these soaring costs, the telecom sector offers some relief. Thanks to reforms in 2014 that invigorated competition in the cellular, broadband, and mobile internet markets, telecom prices in Israel are 30 percent below the Western average. This sector stands as a rare exception in a landscape of high costs, with Canada and the United States leading the way in expensive telecom services at 102 percent and 51 percent above the average, respectively.

Historical Context: A Consistent Trend

This new data is in line with previous OECD findings. In 2022, Israel topped the list of developed countries with the highest cost of living, with prices 38 percent higher than the OECD average. The latest statistics only reinforce the ongoing economic challenges. The war in Gaza has contributed 

Economic and Geopolitical Pressures

Adding to the financial pressures, the Bank of Israel recently observed a rise in inflationary pressures, opting to keep interest rates unchanged in May amid persistent geopolitical uncertainties. The ongoing conflict with the Hamas terror group, now entering its ninth month, continues to exert a heavy toll on the economy.

Forecasts and Future Concerns

Economists predict that interest rates will remain steady, with borrowing costs staying elevated in the near future due to escalating defense expenditures. Additionally, reports of rising energy and food prices are fueling concerns about inflationary stability.

Rapid Price Increases

Data from the Central Bureau of Statistics reveals that consumer prices in Israel accelerated faster than anticipated in the first half of 2024. This increase is driven by rising housing prices and higher travel and transportation costs, further intensifying the cost of living crisis.

Conclusion: The Road Ahead

As Israelis grapple with these economic challenges, the latest OECD report serves as a stark reminder of the urgent need for comprehensive policy measures to address the soaring cost of living and ensure economic stability for all citizens.

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