Osem puts off price hikes as consumers, ministers push against paying more

Histadrut labor chief threatens widespread protest as only handful of companies answer government call to not burden consumers during pandemic

Tobias (Toby) Siegal is a breaking news editor and contributor to The Times of Israel.

People waiting in line outside Rami Levy supermarket in Jerusalem, on April 7, 2020. (Yonatan Sindel/Flash90)
People waiting in line outside Rami Levy supermarket in Jerusalem, on April 7, 2020. (Yonatan Sindel/Flash90)

Israeli consumers expressed outrage on Tuesday over rising costs for consumer goods, gasoline and electricity prices, 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.

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 were 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 towards any commercial body that exploits its status to exploit the public.”

An Israeli woman refuels her car at a gas station in Jerusalem, on March 31, 2019. (Hadas Parush/Flash90)

Israel’s 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.

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 Strauss Group said it will not increase prices further.

The announcements came after Liberman and Economy Minister Orna Barbivai sent warning letters to the heads of major food companies and retailers in Israel 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.

Osem-Nestle, one of the country’s largest food manufacturers, initially rejected the request, but on Tuesday evening Osem CEO Avi Ben Assayag and Chairman of the Board Dan Propper met with Liberman and agreed to postpone the increase of prices by three months. The hikes will now come following the Jewish holiday of Passover.

The parties also agreed to explore new ways of curbing the expected increase of prices.

Osem-Nestle and Schestowitz Ltd have previously argued that the increase of prices was due to the increase in raw materials like flour and oil, as well as supply chain issues affecting the prices of imports to Israel.

Other companies, however, have chosen to ignore the pleas made by Liberman and Barbivai, trusting that the Israeli consumer will be willing to pay more for products that Israeli households have used for decades.

Finance Minister Avigdor Liberman speaks during a press conference, presenting new reform on housing, at the Finance Ministry offices in Jerusalem, on October 31, 2021. (Yonatan Sindel/Flash90)

Liberman blamed food companies on Tuesday 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 percent in 2021, 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 growing by 10.6%.

In early December, Liberman said that bringing down the cost of living was the most difficult challenge facing the government.

“There will be a battle — that won’t be easy — on the issue of the cost of living,” said the finance minister at a business conference, giving the price of dairy products as an example. “With dairy products, we have reached an absurd situation that here in Israel they are 79% more expensive than in Europe. A kilogram of yogurt costs NIS 17 in Israel and NIS 8.50 in Europe,” he said.

The government has significant plans to reform the agricultural sector to allow the import of produce, including eggs and dairy products from abroad. The move is meant to increase competition and make a wider range of products available to Israeli consumers.

A December report by the Israeli aid organization Latet found that over 2.5 million Israelis currently live in poverty, among them more than 1.1 million children, and 932,000 households live in a state of economic distress.

Ricky Ben-David contributed to this report.

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