State comptroller urges MKs to better tackle high living costs as war impact bites
Prices in Israel are 27% higher on average than in OECD member countries, due to a lack of competition and operational inefficiencies at the ports
Sharon Wrobel is a tech reporter for The Times of Israel.
State Comptroller Matanyahu Englman on Monday urged lawmakers to do a better job in tackling the rising cost of living as the cabinet is set to approve a 2024 wartime budget later this week.
In a report on the cost of living, Englman highlighted that high market concentration and a lack of competition continue to fuel rising prices, as the government has neglected the matter.
“The cost of living in Israel soared even before the outbreak of the war, and 2024 commenced with further increases,” said Englman. “The damage caused by the war to the various sectors, combined with a high interest rate environment, are taking a heavy toll on households in Israel, including households of reservists who risk their lives for the State of Israel and many evacuees from the south and the north.”
The state comptroller’s review on the cost of living in Israel was conducted and prepared before the October 7 atrocities and the outbreak of the war. In light of the findings in the report that Israelis are continuing to grapple with rising living costs, Englman called on Prime Minister Benjamin Netanyahu and government ministers to include the issue in their set of priorities along with dealing with the repercussions of the ongoing war against the Hamas terror group.
In a report in December, Englman accused the government of failing to adequately deal with the numerous civilian problems that arose on the home front during the first six weeks of the ongoing war, and called the functioning of government ministries and agencies severely deficient.
“With regard to the formulation of the 2024 budget – the government must also give its opinion and evaluate the impact of the war on the cost of living in Israel and correct the failures that emerged from the report,” Englman demanded.
In 2022, Israel ranked first in a list of developed countries with the highest cost of living, according to data by the Organization for Economic Cooperation and Development (OECD).
In Israel, prices are 27 percent higher than the average in OECD member countries, it was noted in the comptroller’s report. When it comes to the food sector, the data presented in the report showed that in Israel, prices are about 51% higher compared to EU member countries and 37% higher than among OECD countries. For example, whole wheat bread was found to be 82% more expensive in Israel than in the US, England, New Zealand, and Spain, according to the report.
Israel’s economy is characterized by over-concentration in some sectors, such as household goods, compared to other markets, as the 10 largest suppliers and importers control a market share of more than 50% of the food and consumer products industry, according to the report. The lack of sufficient competition has enabled importers of food products and toiletries to generate high profit margins.
Other deficiencies that the government has failed to tackle, according to the report, is the low level of efficiency at Israel’s ports compared to other global ports, which in turn is making imported goods more expensive for consumers. Israel imports 99% of its goods via the country’s seaports.
According to the report, the average waiting time of a ship, as well as the average length of stay of a ship at an Israeli port and the average output per working hour, has deteriorated in the years 2018-2022 compared to 2017.
“This has a negative effect on the quality and level of service making transportation costs more expensive, which are ultimately passed on to consumers and lead to an increase in the cost of living,” it was lamented in the report.
Englman recommended that the Transportation Ministry together with the Finance Ministry act to improve the efficiency of cargo handling ports and shorten the wait times of ships at the port entrances.
In the months before the outbreak of the war, the government was harshly criticized for neglecting to address rising prices while focusing on its contentious judicial overhaul plans. In response, the government in June announced the formation of a ministerial committee to tackle the high cost of living.
