Fuel prices set to reach 7-year high

Finance, economy ministries warn major food companies against price hikes

Ministries threaten to ‘take the required steps to secure a fair, competitive economy,’ in letters to Osem, Strauss and 5 other food firms

Ricky Ben-David is a Times of Israel editor and reporter

People shop at a supermarket branch in Givat Shaul, Jerusalem, October 27, 2021. (Yonatan Sindel/Flash90)
People shop at a supermarket branch in Givat Shaul, Jerusalem, October 27, 2021. (Yonatan Sindel/Flash90)

Israel’s Ministries of Finance and Economy and Industry sent warning letters on Sunday to the heads of major food companies and retailers in Israel, urging them to reverse their decisions to raise prices on food products this year. The ministries cited citizens’ economic hardships brought on by the COVID-19 pandemic, as well as the recipient companies’ multi-million-dollar financial information or executive bonuses for 2021.

The ministries said they expected the food retailers to “be responsible” and withdraw their announcements of price hikes in a country with an already high cost of living.

“We will continue to monitor prices to the Israeli consumer, with the appropriate sense of national responsibility, and in this context, we will not hesitate to take the required steps to secure a fair, competitive economy,” read the letters, signed by Finance Minister Avigdor Liberman and Economy Minister Orna Barbivai.

“Your announcement[s] of price hikes at this time is cynical and offensive to the citizens of the country,” Liberman and Barbivai said in a joint statement.

The missives were sent to seven food and cleaning supplies retailers in Israel including Strauss Group, Osem (owned by the Swiss company, Nestle), and Sano.

In the letter to Strauss Group President and CEO Giora Bardea, the ministers said the company — one of Israel’s biggest food conglomerates with dairy, salad, snacks, and dip products — registered record profits in 2021 and strong margins in Israel, compared to other countries that sell its products.

“The company paid dividends in 2021 of an overall NIS 270 million ($84 million), a record number…in the past decade,” the ministers wrote, criticizing the company’s current prices which they said were “higher than the world average.”

People shop at a supermarket in Givat Shaul, Jerusalem, October 27, 2021 (Yonatan Sindel/Flash90)

In a letter to the CEO of the Israeli sales and distribution company Diplomat, which imports food and home products from major brands like Tide, Kellogg’s, Illy, Pampers, and Starkist, the ministers noted that the executive received a NIS 11.5 million ($3.61 million) bonus in 2021.

The ministers wrote in all the letters that the strong shekel combined with low inflation and wage increases in 2021 “meant that products and raw materials brought by your company to Israeli were cheaper for you, without you reducing your prices for the Israeli consumer accordingly and [these prices] were among the highest in the world for these products.”

The letter said that Israel’s economy was strong, but the global health crisis was not over. “People and small businesses did not recover from the corona[virus] crisis, and some of them were harmed by the Omicron wave sweeping through the country right now.”

Finance Minister Avigdor Liberman speaks during a press conference, presenting new reform on housing, at the Finance Ministry offices in Jerusalem, on October 31, 2021. (Yonatan Sindel/Flash90)

The Israeli government, the ministries said, was doing “everything in its capabilities to help them overcome this wave safely, but we need the cooperation of other ‘players’ in the market too.”

Late last month, Osem drew a torrent of criticism and calls for a boycott after it announced that it would be raising the prices of its products next month. Osem said that, starting in February, it would raise the prices of its products by three to seven percent, owing to a rise in prices in basic ingredients.

Osem is one of the largest producers of products in Israel, and sells pantry staples including pasta, ketchup, cereals, crackers, and the popular peanut snack Bamba.

In several supermarkets, activists were seen placing stickers on Osem products, calling on consumers to boycott the brand, and several politicians also spoke out against the move.

Separately, fuel prices were set to rise Monday night to levels not seen for seven years, standing at NIS 6.71 per liter of 95 octane petrol in self-service, drawing additional outrage.

In early December, Liberman said that bringing down the cost of living was the most difficult challenge facing the government, which is also struggling to bring down spiraling property prices.

“There will be a battle — that won’t be easy — on the issue of the cost of living,” said the finance minister at a business conference, giving the price of dairy products as an example. “With dairy products, we have reached an absurd situation that here in Israel they are 79% more expensive than in Europe. A kilogram of yogurt costs NIS 17 in Israel and NIS 8.50 in Europe,” he said.

The government has significant plans to reform the agricultural sector to allow the import of produce, including eggs and dairy products from abroad. The move is meant to increase competition and make a wider range of products available to Israeli consumers.

Outrage over prices grew last month, after over a decade since Israel last saw widespread social unrest on the matter.

A price hike in cottage cheese, an Israeli staple, was the first spark that led to the 2011 “tent revolution,” which saw young Israelis furious at sharp rises in rents and cost of living erect shelters on the upmarket Rothschild Boulevard in the heart of Tel Aviv. Thousands of protesters soon took to the streets across Israel, shouting slogans demanding social justice. However, the movement ultimately did little to affect rising costs.

Most Popular
read more: