PM meets finance minister as he pledges to tackle rising cost of living


Addressing recent increases in the prices of consumer goods, gasoline and electricity, Prime Minister Naftali Bennett pledged on Sunday to implement measures aimed at reducing the cost of living in Israel.

“One thing always lowers prices and improves service to consumers – competition,” Bennett said at the weekly cabinet meeting on Sunday, adding that he intends to present to the Israeli public a comprehensive plan that will reduce the cost of living in the next few days.

“Beyond any short-term actions that can be taken, the solution is to identify spaces where competition doesn’t exist and create competition within them,” Bennett said. “It will require all government ministers. We need to relax the regulations and open up the market to competition.

The Prime Minister then met with Finance Minister Avigdor Liberman and financial experts to discuss the practical steps needed to implement such a plan.

Following the meeting, it was decided that the Ministry of Finance will present a national plan to combat the cost of living in Israel starting next week.

Bennett later said the government faced 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 of lobbyists and shareholders on the decision-making process.

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

But despite Bennett’s apparent confidence in his government’s ability to tackle the burning issue effectively, some ministers have said it could be more difficult 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 misrepresented,” he said during the cabinet meeting. “We currently have many distribution chains and they do not compete with each other, they coordinate prices with each other. Overseeing costs shouldn’t be a dirty word,” he said.

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

In an interview with Kan Bet Radio on Sunday, Liberman said that “Israel enters 2022 in a good situation. It is growing faster than all Western countries.

However, admitting that Israel’s middle class bears most of the country’s financial burden, Liberman said his goal was to strengthen the middle class, citing the partially successful campaign by the finance and economy ministries to convince major manufacturers and importers to postpone price increases.

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

Osem products are seen on a shelf at a Rami Levy supermarket in Jerusalem on February 3, 2022. (Yonatan Sindel/ Flash90)

The hikes were expected to raise the costs of products such as ketchup, pasta, rice, household cleaners and 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 food prices this year, citing recent financial income and executive bonuses, as well as economic hardship caused by the COVID-19 pandemic. They also warned that they may take a closer look at the food giants’ business practices.

Warnings from ministers and public pressure on social media seemed to be working, with a number of big companies postponing or canceling planned hikes.

Israelis are also facing hikes in the cost of electricity, which are rising 5.7% this month.

Gasoline prices have increased by NIS 0.34 ($0.11) per litre, costing the Israeli consumer an extra NIS 17 ($5.36) on average, while refueling their car .

Liberman defended the increases in energy costs as modest compared to the rest of the world.

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