A cabinet in the dairy section of an Israeli supermarket. Prices have been rising steadily, however benefits and wages have gone down (Source: The Judean)
A refrigerator in the dairy section of a Shufersal grocery (The Judean)

Israeli Food Prices Soar Out Of Control As Wages Stand Still

Details
The Judean Staff
Finance

Israel is facing a food pricing crisis that is rapidly turning into a full-blown economic alarm. Over the past two years, food prices have exploded at a pace that dwarfs not only wage growth, but also housing price increases and even food inflation in the world's most expensive nations. While everyday Israelis are tightening their belts, the country’s food giants are fattening their profit margins.

A Surge That Outpaces Everything Else

From March 2023 to March 2025, food prices in Israel—excluding fresh produce—rose by 8%, outstripping the Consumer Price Index (6.2%) and housing prices (7.6%). When fruits and vegetables are included, the total spike reaches 9.5%. By contrast, food prices in the U.S. rose only 5.3% during the same period. The disparity is glaring—and alarming.

This relentless rise has become untethered from market logic. The cost of food has soared even faster than key living expenses and well beyond Israel’s average wage growth, meaning that every shekel buys less food than it did two years ago.

The Manufacturers’ Excuse: Input Costs

Manufacturers, predictably, claim their hands are tied. They cite rising global prices of raw materials, energy, and shipping. Panda Chocolate CEO Daniel Barkat, for example, blames skyrocketing cocoa prices, which have indeed tripled since 2023. Other cited culprits include a 25% increase in air freight costs and a recent boost in minimum wages.

But beneath this narrative lies a different truth: many essential input prices are actually falling. Sea freight rates, after surging due to regional instability, have now dropped by over 60%—from \$8,000 to \$3,000 per container from China to the Mediterranean. Global wheat prices have plunged 18% since 2021, yet flour prices in Israel have spiked—23% for white flour, 38% for wholemeal. Soybean, corn, and sugar prices are also declining. The math simply doesn’t add up.

A Broken Market: Concentration and Cartels

What explains this disconnect? Experts point to a broken and overly concentrated food market. A handful of powerful conglomerates—Unilever, Strauss, Tnuva, Coca Cola Israel (Central Bottling), Gad, and Diplomat—control vast swaths of the supply chain. These companies can dictate prices with little fear of competition.

As reported by Israel's leading business publication, Globes, according to Lobby 99, a public interest advocacy group, price "stickiness" in Israel’s food market results from anti-competitive practices, where dominant manufacturers actively block new entrants and preserve inflated prices. The system is rigged to maintain high costs, regardless of falling input expenses.

Failed Reforms and Government Paralysis

Despite repeated attempts to open Israel’s food market to competition, reforms have failed to gain traction. The government's "What’s Good for Europe is Good for Israel" plan aimed to remove unnecessary regulatory barriers and facilitate imports. But endless committee meetings and bureaucratic inertia have stalled progress, leaving consumers with little relief.

Meanwhile, products under government price supervision—such as milk and eggs—have seen even sharper price hikes due to outdated pricing formulas that paradoxically increase prices when producers’ costs rise.

Purchasing Power in Decline

The erosion of purchasing power is now painfully visible. While nominal wages have increased, real wages—what those salaries can actually buy—have declined by 1.4% year-over-year as of February 2025. The Bank of Israel admits that while wages are slightly above pre-war levels, they still trail long-term trends. The result? A wage-price spiral that feeds inflation while impoverishing the middle class.

Imported goods like clothing and furniture—where competition is fierce—have dropped in price, offering stark contrast to the food sector's price trajectory.

The Path Forward: Reform or Ruin

Without bold reforms to break monopolies, slash red tape, and encourage true competition, Israelis will continue to suffer under a system designed to benefit a few corporate giants at the expense of millions of families.

Until then, every trip to the supermarket is a reminder that the cost of living in Israel is no longer just a policy issue—it’s a national crisis.

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