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Major importer delays price hikes amid public criticism

Diplomat joins fellow companies following a massive backlash by politicians and the general public, who are already contending with jumps in the cost of electricity and gasoline

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)

Food importer Diplomat on Wednesday joined Osem-Nestle in delaying price hikes of various products until at least after the Passover holiday in April, amid an intense public backlash.

The company said the planned increase in prices came only due to rising operating costs. It said the delay will cause it economic damage.

“The company is not a manufacturer, but an importer and distributor of various food items and the products,” Diplomat said in a statement. “When international manufacturers raise prices, Diplomat is forced to raise prices.”

Among the brands imported by the company are StarKist, Pringles, Heinz, Milka, Gillette, Illy, Pampers, Mazola, Kikkoman, Oreo, Oral B and many more.

Consumers expressed outrage over rising costs of consumer goods, gasoline and electricity, as several manufacturers bowed to pressure from lawmakers and agreed to postpone planned price hikes.

Price hikes on a wide array of consumer goods had been announced by some of Israel’s largest food manufacturers and distributors, including Osem-Nestle, as well as by international import giants like Diplomat and Schestowitz Ltd.

Illustration photo of Osem brand pasta. (Hadas Parush/Flash90)

The hikes were slated to raise the costs on goods such as ketchup, pasta, rice, household cleaners, and much more by several shekels in some cases. The price of a four-pack of StarKist tuna cans was set to rise by 6-8 percent, reaching NIS 27 ($8.50), for example. The prices of dairy products were expected to rise by 3-9%.

Histadrut labor union head Arnon Bar-David sent a letter to Finance Minister Avigdor Liberman and Prime Minister Naftali Bennett on Tuesday, urging them to take decisive action against what he describes as “exploiting the Israeli public,” and threatened a “widespread protest” if prices are not lowered.

“The big manufacturing companies are reporting high profits. The main reason for their repeated price increase stems from one fact — they simply can,” Bar-David’s letter read. “I urge you to be uncompromising toward any commercial body that exploits its status to exploit the public.”

The finance and economy ministries have attempted to limit the dramatic increase of prices, leaning on companies to hold off on the hikes while people are still dealing with economic hardships brought on by the COVID-19 pandemic.

The hikes were slated to raise the costs on goods such as ketchup, pasta, rice, household cleaners, and much more by several shekels in some cases. The price of a four-pack of Starkist tuna cans was set to rise by 6-8 percent, reaching NIS 27 ($8.50), for example. The prices of dairy products were expected to rise by 3-9%.

Cleaning equipment and services giant Sano said Monday it would not lower the prices of some of its products that saw an increase in prices during December, while the Strauss Group said it will not increase prices further.

Finance Minister Avigdor Liberman speaks during a Yisrael Beytenu faction meeting at the Knesset, on January 10, 2022. (Olivier Fitoussi/Flash90)

The announcements came after Liberman and Economy Minister Orna Barbivai sent warning letters to the heads of major food companies and retailers on Sunday, urging them to reverse their decisions to raise prices on food products this year, pointing to financial information showing large revenues and executive bonuses in the last year.

Liberman blamed food companies for trying “to profit at the public’s expense” and congratulated the companies that “showed solidarity” by choosing not to increase prices at this time. He said that the Finance Ministry will “use all tools at its disposal” to monitor the activity of companies that did increase prices.

Israelis are also dealing with jumps in the cost of electricity, which is rising by 5.7% this month, costing the Israeli household an estimated addition of NIS 35 (just over $11) per month.

The price of gasoline will increase by NIS 0.34 ($0.11) per liter, costing the Israeli consumer an addition of NIS 17 ($5.36) on average while refueling their car.

Liberman has defended the energy cost hikes as modest compared to the rest of the world.

Throughout 2021, the cost of consumer goods in Israel rose by 2.8%, the highest rate in 13 years, according to data released by the Central Bureau of Statistics.

Rises in the consumer price index were seen in clothing and footwear (1.1%), home furnishings (0.7%) and food (0.5%). Meanwhile, national housing prices continued their steep rise, with average prices for homes across the country rising by 10.6%.

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