The cabinet on Sunday approved the creation of a committee on bringing down food prices by advancing "parallel imports," cheaper imports of products already available on the shelves.
"There is an unacceptable phenomenon of historic arrangements that are causing an increase in food prices and consumer exploitation," Prime Minister Binyamin Netanyahu said at the meeting. "Without opening up the markes to imports, there will not be a reduction in food prices."
Israel’s food prices have soared from 10 percent below the OECD average in 2004 to 25% above it in 2013. A Knesset study released last week found that while the cost of food went up just 1.8% in the UE from 2005-2013, in Israel it rose 16%. In all the food categories, only fruits and vegetables were found to be cheaper in Israel.
Citing a finance ministry study that found that just two chains dominate some 60% of the retail market, Netanyahu called the retail market a 'cartel' that needs to open to competition. "The meaning of this statistic is that there is no competition," he said. Reducing import barriers, he said, would help the problem. The committee, to be headed by Prime Minister's Office Director Harel Locker.
Food prices helped lay the groundwork for the 2011 social protests, as activists boycotted the soaring price of cottage cheese. More recently, high coffee prices came under scrutiny as low-cost coffee chain Cofix opened its doors.
In December, Finance Minister Yair Lapid presented a bill on food prices to a joint meeting of the Knesset’s Finance and Economy Committees, which was based on three principles: increasing price transparency, increasing geographic competition of retail chains, and imposing limits on suppliers.
The bill was based on the findings of yet another committee tasked with finding policies to reduce food prices, the Economy and Trade Ministry's "Kadmi Committee."