‘Food prices in Israel 25% higher than in Europe’

Israelis are paying significantly more for their food and have been seeing prices rise much more rapidly than in other developed countries, according to a report released Tuesday by the Knesset Research and Information Center.

Food prices in Israel stand at 19 percent higher than other Organization for Economic Co-operation and Development countries and have risen more between 2005 and 2013 than in any other developed country. The difference is even more stark in comparison to EU countries. Prices in Israel are 25% higher than in Europe, and between 2005 and 2013 the price of food in Israel rose 16% in real terms, while in Europe it only rose 1.8%.

Not surprisingly, the report found that the price differences were most pronounced in dairy products and soft drinks. Last month, a leaked OECD study found that dairy products cost over 40% more and non-alcoholic beverages 40% more in Israel than the OECD average, according to a report by Haaretz.

Tuesday’s report was prepared for consideration by the so-called food committee, which is tasked with formulating a bill aimed at increasing competition in the food market, thereby lowering prices, to present to the Knesset for approval. The law is expected to take the findings of the Kedmi Committee into consideration and focus on regulating activities between suppliers and retailers, requiring grocery chains to publish prices on the Internet and prohibiting chains from opening more than one store in an area where no other chain is present.

The Kedmi Committee was formed after the social protests of 2011 to investigate the cost of food and consumer goods in Israel and competition in the market. It found that prices in Israel were 10%-20% lower than in other developed countries in 2005, but by 2010 they were 10%-20% higher. The committee largely attributed the price hikes to the lack of competition in the marketplace, as the two major grocery chains in the country — Mega and Shufersol — controlled 64% of the market. Since 2011 the price of food has risen another 2.7%, according to the Knesset Research and Information Center study.

Earlier this year, State Comptroller Yosef Shapira criticized the government in an annual report for abandoning the regulation of food costs in Israel between 2005 and 2011, allowing companies in a noncompetitive market to set the prices. This brought about increased profits for manufacturers and importers, while exacerbating the economic hardships faced by Israeli consumers, according to the report.

“The ministries of Finance, Industry, Agriculture and the entire government must rectify the wrongs and maintain real control on the prices of essential foodstuffs by defining the basic food package and closely monitoring its costs,” he wrote.

Times of Israel staff contributed to this report.