Prime Minister Benjamin Netanyahu on Monday convened the inaugural meeting of an ad hoc ministerial committee formed to tackle the cost of living, as Israelis battle persistent interest rate rises and inflation despite government promises to focus on lowering prices.
Notably absent from the meeting were key ministers with significant influence over the economy and Israel’s financial health.
Panel members Finance Minister Bezalel Smotrich, Economy Minister Nir Barkat, and Health and Interior Minister Moshe Arbel all skipped the meeting.
Netanyahu told those present that Israelis needn’t be doomed to pay prices that are much higher than those in the rest of the developed world and vowed to wage a “determined fight” on the issue, in his opening remarks at the meeting.
The premier, an outspoken advocate of free market capitalism and deregulation, laid blame on “hidden monopolies and all kinds of barriers to competition,” but also chided businesses for seeking to maximize profits.
“I get the impression that lately, importers, producers, and distributors have simply cut the brakes,” he said.
Chaired by Netanyahu, the panel includes 13 ministers, overseeing the following ministries: finance, economy, agriculture, environmental protection, energy, health, welfare, religious services, housing, development of the Negev and Galilee, tourism, immigration, and communications.
In addition, Bank of Israel Governor Amir Yaron and the next head of the Competition Authority are “permanent invitees,” alongside a number of professional staff. Last month, Barkat requested the resignation of Competition Authority head Michal Cohen, charging that the agency was “suffering from severe underperformance” with her at the helm.
It will meet again in two weeks so professional staff can propose “practical steps for the struggle,” and will convene every few weeks after that, Netanyahu said.
Netanyahu announced the formation of the panel last week as his government faced public criticism that it has neglected to address rising prices while focusing on its controversial judicial overhaul plans.
The prime minister has also faced criticism on the matter from within his coalition.
Communications Minister Shlomo Karhi of Netanyahu’s Likud party lashed out Monday at Smotrich, calling him and ministry officials “out of touch and elitist” and accusing them of failing to adequately tackle the rising cost of living, despite the minister heading a different panel formed to deal with the issue.
“The socioeconomic cabinet headed by Smotrich has only convened once,” Karhi told the Ynet news site, adding that the meeting had not even dealt with socioeconomic issues.
Israelis have been facing aggressive interest rate hikes and inflation. Last month, the Bank of Israel raised its benchmark interest rate for a 10th consecutive time, lifting borrowing costs by 25 basis points to 4.75 percent as it struggles to tamp recent inflation growth.
The hikes by the Bank of Israel have rapidly fueled the costs of mortgage holders who are struggling to pay off monthly payments. Over the past year, the average cost of monthly mortgage payments has gone up by an estimated NIS 1,000 ($267).
In addition, in recent months, Israel’s largest food manufacturers have announced price increases in the retail sector, led by milk products and products such as bread, instant coffee, sugar, and cocoa.
Israel’s economic growth forecasts have been cut and investments have also been hampered by the uncertainty surrounding the government’s planned contentious judicial overhaul and a slowdown in the global economy.
Polls have shown the public is dissatisfied with the government’s performance on the economy, saying that the coalition is concentrating on its contentious judicial overhaul instead of the spiraling cost of living.
A survey released by the Israel Democracy Institute last month showed that most Israelis believe that the high cost of living is the fault of government inaction, 27 percent blame large monopolies, and 3-4% attribute responsibility to local manufacturers, importers or retailers.
The government has also faced criticism over the 2023-2024 state budget passed last month, which opponents say allocates excessive funds to the Haredi community while failing to deal with the crisis.
Daphna Aviram Nitzan, director of the Center for Governance and Economy at the Israel Democracy Institute (IDI), told The Times of Israel last month that the budget did not address the soaring cost of living, but rather “allocates funds that are not growth drivers for the economy at the expense of a diminishing working population, which will have to carry the high tax burden to finance this budget.”
Included in the NIS 484 billion ($131 billion) 2023 budget and NIS 514 billion ($139.5 billion) 2024 budget, the government allocated billions of shekels in funds to causes that the Finance Ministry and leading economists have warned will lower incentives for the Haredi community to enter the workforce and its members’ qualifications to do so, and will stifle economic growth.
Carrie Keller-Lynn and Sharon Wrobel contributed to this report.