Food prices in Israel
are 25% higher than in the EU, according to a study published on Tuesday by the
Knesset Research and Information Center. It adds that food prices in Israel
rose by 16% in real terms in 2005-13, compared with a 1.8% gain in the EU.
The Israeli Food Prices Index is 19% higher, in terms of purchasing power, than
the OECD average and 25% higher than the EU average. Israeli prices are
particularly high in food sectors where competition is low, or which are
price-controlled (such as milk, cheese, and eggs). The only category in which
Israeli prices are lower than the OECD average is fruits and vegetables.
The study was conducted at the request of the Knesset Joint Economic Affairs
and Finance Committee for the Promotion of Competition in the Food Sector,
ahead of debate on the bill to promote competition in the food industry. The
bill will implement some of the Kedmi Committee's recommendations by using
three tools: regulating retailer-supplier relations; increasing competition
geographically; and improving price transparency.
Analysis of the factors for the higher increase in Israeli food prices,
compared with the EU, found that they were not the rise in prices of important
inputs (commodities, electricity, water, and labor), or tax rates, but the
centralized structure in the production and retail sides.
The study recommends restricting market shares in the production and retail
sides of the food sector, expanding the market share of private labels, and to
appoint a data collection agency to review regulatory progress and monitor the
drop in food prices. This agency will publish a public report once a year.