PM meets finance minister as he vows to tackle rising living costs

Bennett says competition is best tool for mitigating price hikes; Finance Ministry expected to present plan next week

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

Prime Minister Naftali Bennett (center) addresses a weekly cabinet meeting in Jerusalem on February 6, 2022. (Haim Zach/ GPO)
Prime Minister Naftali Bennett (center) addresses a weekly cabinet meeting in Jerusalem on February 6, 2022. (Haim Zach/ GPO)

Addressing the recent price hikes in consumer goods, gasoline, and electricity, Prime Minister Naftali Bennett vowed Sunday to enforce actions aimed at lowering the cost of living in Israel.

“One thing always lowers prices and improves consumer service — competition,” Bennett said during Sunday’s weekly cabinet meeting, adding that he intends to present the Israeli public with a comprehensive plan that will lower living costs within the next few days.

“Beyond any short-term actions that can be taken, the solution lies in identifying those spaces where competition does not exist and creating competition within them,” Bennett said. “This will require all ministers of the government. We need to ease regulation and to open up the market to competition.”

The prime minister later met with Finance Minister Avigdor Liberman and financial experts to discuss practical steps required for implementing such a plan.

Following the meeting, it was decided that the Finance Ministry will present a national plan for combating the cost of living in Israel as soon as next week.

Bennett later said that the government was facing a unique opportunity “to be brave and address these long-term structural failures that have led to a decade of price hikes.” He added that this essentially means reducing the impact lobbyists and shareholders have on the decision-making process.

Prime Minister Naftali Bennett seen with Finance Minister Avigdor Liberman during a vote on the first reading of the state budget in the Knesset, September 2, 2021. (Olivier Fitoussi/Flash90)

But despite Bennett’s apparent confidence in his government’s ability to effectively tackle the burning issue, some ministers have said it might be harder than he hopes.

Meretz Chairman and Health Minister Nitzan Horowitz noted that while competition is theoretically a good policy to encourage, it could lead to false pretenses.

“Competition can also be falsely presented,” he said during the cabinet meeting. “We currently have many retail chains and they don’t compete, they coordinate prices between them. Supervising costs should not be a dirty word,” he stated.

Liberman has argued that the cost of living in Israel is relatively low, when compared to other countries. “The inflation rate in Israel is about half what it is in similar countries, and lower than those of the US and Germany,” he said.

In an interview given to Kan Bet Radio on Sunday, Liberman argued that “Israel is entering 2022 in a good situation. It’s growing faster than all Western countries.”

However, admitting that the Israeli middle class carries most of the country’s financial burden, Liberman has stated that his goal is to strengthen the middle class, citing the partially successful campaign led by the finance and economy ministries to convince major manufacturers and importers to postpone planned price hikes.

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

Osem products are seen on a shelf in a Rami Levy supermarket in Jerusalem on February 3, 2022. (Yonatan Sindel/ 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.

Liberman and Economy Minister Orna Barbivai had sent warning letters to the heads of major food companies and retailers in Israel, urging them to reverse their decisions to raise prices on food products this year, citing recent financial revenues and executive bonuses, as well as the ongoing economic hardships brought on by the COVID-19 pandemic. They also warned they could take a closer look at the food giants’ business practices.

The minsters’ warnings and public pressure on social media seemed to work, with a number of major companies postponing or canceling the planned hikes.

Israelis are also dealing with jumps in the cost of electricity, which is rising by 5.7 percent this month.

The price of gasoline is up 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.

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