Food and beverage prices in Israel are 52% higher than OECD average

Data shows consumer prices in Israel second only to South Korea among 38 developed countries; telecom prices are the only bright spot, at 30% cheaper than average

Illustrative: Bread for sale at the Rami Levy supermarket in Jerusalem on July 17, 2022. (Yonatan Sindel/Flash90)
Illustrative: Bread for sale at the Rami Levy supermarket in Jerusalem on July 17, 2022. (Yonatan Sindel/Flash90)

Food and beverage prices in Israel are 52 percent higher than the average among developed countries, second only to South Korea, according to comparative consumer price data released by the Organization for Economic Cooperation and Development in June and reported by Channel 12.

Prices for bread and grains in Israel were found to be the among the highest in OECD countries, at 49% above the average, with only Swiss prices coming in higher. Similarly, Israeli prices for dairy and eggs were the second most expensive among the 38 OECD countries, at 64% more expensive than the average, second to South Korea.

Despite their prevalence in Middle Eastern cuisine, the prices of fruit and vegetable in Israel were found to be 25% above the average.

While the data showed that there were three countries where meat is more expensive than in Israel, prices in this category were also 64% above the OECD average.

The only exception to the high prices in Israel was in the telecom sector, which came in at 30% below the Western average, thanks to a series of reforms in 2014 that spurred competition in the cellular, broadband and mobile internet markets. Prices in Canada and the United States were the highest in this category, at 102% and 51% above the average, respectively.

Illustrative: A woman talks on her mobile phone at a bus stop, in Tel Aviv, on August 24, 2012. (Yaakov Naumi/Flash90/File)

The new price data tracks with past OECD reports — Israel ranked first place in a list of developed countries with the highest cost of living in 2022, with prices 38% higher than the member country average.

Some sectors in the Israeli economy suffer from overconcentration, including the food retail sector, as the top three supermarket chains account for over half of the Israeli market, limiting competition and putting upward pressure on prices.

At the same time, import tariffs, regulatory bottlenecks, value-added tax costs and kosher restrictions have been keeping out international retail chains and discounters. In addition, relative high food prices in Israel have been generally attributed to a lack of competition among local importers and manufacturers.

Outside of food and beverages, car prices in Israel were found to be 52% above the average — the highest of any OECD country.

The Bank of Israel recently noted a pickup in inflationary pressure, keeping interest rates unchanged in May amid continued geopolitical uncertainty as the nine-month-old war with the Hamas terror group continues to bite into the economy.

Economists at the time were in consensus that interest rates would remain steady and forecast that borrowing costs would stay high for longer in the coming few months as defense costs continue to rise.

There were also reports of price increases in energy and some food costs, raising concerns for inflationary stability. Data from the Central Bureau of Statistics showed that consumer prices in Israel in the first half of 2024 quickened at a faster pace than forecast, led by an increase in housing prices and higher travel and transportation costs.

Sharon Wrobel contributed to this report. 

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