Lapid requests price supervision for Milkys

Canola oil, whole wheat bread also on regulation list; MK Frej: Finance minister needs to fight monopolies.

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November 5, 2014 21:33
2 minute read.
Black Death

Milky comes in a variety of flavors.. (photo credit: COURTESY STRAUSS/WIKIMEDIA)

 
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Finance Minister Yair Lapid on Wednesday called for putting a variety of foods under price supervision, including puddings such as the Milky snack, whose high price recently caused an uproar.

In a letter to the heads of the committee responsible for price controls, Lapid requested regulation of the prices of canola oil, whole wheat bread, yogurt, puddings, milk, soy milk, frozen vegetables, and toilet paper.

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Last month, a Facebook post showing that the price of Milky pudding in Israel where it is made was several times higher than abroad went viral, reigniting a heated debate over the high cost of living in Israel. The high price of cottage cheese – which had previously been under supervision – helped ignite the 2011 summer street protests on the cost of living.

A Knesset Research and Information Center report published in October found that the price of food in Israel, once below the OECD average, will have risen 34.1% in the 10 years up to 2015. Only fresh fruits and vegetable remained cheaper in Israel, while categories such as dairy products and sodas remained more than 50% more expensive than the OECD average.

“I believe in a free market and enhancing competition, as long as it leads to the benefit of consumers,” Lapid wrote in his letter on Wednesday. “But there are structural market failures that prevent healthy competition and create unreasonable profit margins, which we want to prevent for the good of the Israeli public.”

Likud MK Gila Gamliel submitted a bill Wednesday that would give the finance minister authority to put the 20 best-selling food products under price supervision. The bill’s main effect, she said, would be “immediate and effective reduction of the most consumed food products in Israel.”

The Israel Consumer Council welcomed the move and asked for more products to be regulated.



The idea is to create a basket of standard goods that would be affordable and create an “anchor effect,” bringing down the prices of other products.

“A healthy economy is not only a free market. It is a system of checks and bal ances,” council CEO Ehud Peleg said. Such changes, he added, were best suited for the short run, while deeper reforms are necessary for the long run.

A Meretz petition to conduct a Knesset plenum discussion on the cost of living gathered the requisite 40 signatures on Wednesday. The discussion is to take place in two weeks.

Meretz MK Issawi Frej, however, said the proposed solution is no more than a band-aid.

“Supervision of toilet paper or soy milk will not bring the cost of living down, only a change of mindset and priorities will,” he said. “Instead of paying lip service to the cost of living by imposing price supervision on another product that is more or less important, the Finance Ministry needs to fight against the monopolies and concentration of the Israeli economy, but it’s hard to expect Lapid to hurt his friends.”

In his letter, Lapid also pointed out that some manufacturing inputs would be getting cheaper in the coming year, which could help bring down prices. Electricity prices are to drop 12-15% in January, and water prices to fall 10% in 2015.

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