Yishai nixes decision to drop price control on bread

Estimates are that once bread prices are no longer under government supervision, they could increase by between 10% and 30%.

By SHARON WROBEL
November 26, 2007 08:40
1 minute read.
bread biz 88 224

bread biz 88 224. (photo credit: Ariel Jerozolimski)

 
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Industry, Trade and Labor Minister Eli Yishai announced on Sunday that he will cancel his decision to lift bread prices out of government control, saying that bakery owners were planning to raise prices at an "unreasonable" rate. "I will not sign the order to lift price controls on bread as I have learned that bakery owners intend to raise prices at an unreasonable rate taking into account the losses of the past year," said Yishai. It was only two weeks ago that the government approved a temporary compensation package to assist low-income families to cope with rising bread prices, which was the first step toward reforms that would transfer pricing from government control into the hands of the countries' bakeries. Estimates are that once bread prices are no longer under government supervision, they could increase by between 10 percent and 30%. "More than two months ago, price-controlled breads were supposed to be raised by 10.7%, but Yishai made us wait and in the meantime our losses have mounted to between NIS 15 million and NIS 20m. as a result of the sharp increase in global wheat prices," Yohanan Aharonson of Davidovich Bakery & Sons Ltd. and head of the Bakers' Association told The Jerusalem Post. "We are preparing for taking legal action against Yishai's decision. Either price controls over bread need to be lifted from state control or if it is decided that they remain in control of the government, they need to be adjusted when needed." Over the past few months, the Industry, Trade and Labor Ministry had been working on a compensation mechanism to put an end to the supervision of price-controlled breads, which include plain white bread, plain brown bread (lehem ahid) and regular halla - all of them sold whole or sliced. When this happens, prices of state-controlled breads, which had been under government supervision since the 1950s, were supposed to be lifted from state control. A poll conducted by the Histadrut Labor Federation showed that four out of five Israelis opposed plans to cancel government control over bread prices. According to Army Radio, 10% of those polled said they would stop buying subsidized bread if its price increased and most of those polled said they supported government control over the price of cooking gas as well. Jerusalem Post staff contributed to this report.

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