Israeli prices still remain high relative to Europe

After close to a decade of steadily rising prices, the cost of food has turned lower, although it remains higher than in Europe, the Knesset Research and Information Center told the Finance Committee this week.

Prices from the start of 2014 through April of this year fell 1.3%, according to economist Itamar Milrad. But, he noted, that did little to reverse the impact of a decade of rising prices. Food prices rose from 2005 to April 2015 by 35.4%, with prices of fresh produce climbing by 37.4%. Food prices rose rapidly in 2005-2010 before slowing in the next two years in the wake of the social justice protests in the summer of 2011, which was sparked by a price hike for cottage cheese. They resumed their climb in 2013.

The research was ordered by the finance committee ahead of deliberations on competition in the food industry, which was approved by the Knesset 15 months ago about the time food prices began turning lower. The figures come at a time when food retailers – and to a lesser extent food makers – are grappling with slumping sales and falling profits.

The center attributed the decline in food prices last year to lower commodities prices worldwide and lower prices for processed food and ingredients in Europe, a major source of Israeli imports. Wheat, corn, sugar, cocoa and coffee prices all fell, as did the cost of energy, which factors in to the cost of food to the consumer. But the center also cited domestic factors, namely the growing phenomenon of consumers shopping based on price, which has caused them to move to lower priced goods such as private-label products, and to shop at discount supermarkets.