Milk, cheese prices to increase 5% as economic crunch hits dairy aisle

Milk prices not allowed to rise again until at least May 2023 under deal; dairy board sought 14% hike, but was negotiated down in talks with treasury, Agriculture Ministry

Milk for sale at a Rami Levy supermarket in Jerusalem on July 17, 2022. (Yonatan Sindel/Flash90)
Milk for sale at a Rami Levy supermarket in Jerusalem on July 17, 2022. (Yonatan Sindel/Flash90)

The Israeli Dairy Board approved raising the price of milk and other price-regulated dairy products such as cheese and butter by 4.95 percent on Sunday, the latest blow to Israeli consumers contending with the inflating costs of goods.

Reports indicated that the board initially mulled a 14% hike. However, negotiations between the dairy board, the Finance Ministry and the Agriculture Ministry resulted in a compromise of 4.95%.

The price of milk will be frozen at the higher rate until May 2023, at which point it will automatically revert back to its original price before the hike, though it may be raised again in the future.

Despite living with inflation levels at around half the rate of the rest of the developing world, Israeli consumers have felt the pinch of rising prices in nearly every consumer category.

Israel’s inflation rate in July was 5.2% year over year, the highest in decades, but still lower than the 8.5% rate in the US and below the OECD average of 9.6% for May, the last month for which data is currently available.

Israel’s Consumer Price Index (CPI) rose an unexpected 1.1% in July and an annual 5.2% compared to July 2021, the fastest yearly rate in 14 years, according to the latest report published by the Central Bureau of Statistics.

Israelis buy dairy products in the Rami Levy supermarket in Jerusalem. The rise in the price of cottage cheese sparked widespread protests, June 16, 2011. (Nati Shohat/FLASH90)

Dairy prices in Israel are a sensitive issue and have sparked reactions that often snowball into mass demonstrations against the high cost of living. In 2011, the so-called cottage cheese protest resulted in supermarkets lowering dairy prices and policy reforms aimed at lowering consumer prices.

Three years later, a separate mass protest encouraged Israelis to leave the country after consumers noticed the Milky chocolate pudding treat was sold at a lower price abroad.

The rising cost of living in Israel is high on the agenda ahead of another round of elections in November. According to a recent survey by the Israel Democracy Institute (IDI), 44% of Israeli respondents said a given party’s economic platform and its plan for addressing the rising cost of living were the main factors influencing their decision when voting on November 1.

The cost of fresh fruit jumped by 8.5%, transportation by 3.3%, and culture and entertainment by 1.2%, according to the CPI. Goods like school bags, toiletries, and cosmetics also saw a rise. Clothing and footwear dropped by 4%.

Housing prices, which are not tracked as part of the CPI, have also risen sharply.

Israeli shekels, Jerusalem. (Orel Cohen/ Flash90)

The average price of a home in an apartment building now stands at NIS 1,880,900 ($580,623) for the second quarter of 2022, an increase of NIS 80,000 ($24,695) from the first quarter of the year, according to CBS.

In Tel Aviv, the average price for an apartment is now more than NIS 4,000,000 ($1,234,777), while in Ramat Gan, Kfar Saba, and Jerusalem, average prices are over NIS 2,500,000 ($771,736).

Times of Israel staff contributed to this report. 

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