BoI: Prices have increased quicker than income since 2007

Middle class share of overall population has decreased from 28.8% to 24.7% since 1997, along with increase in lower class.

Tent protest on north Tel Aviv's Nordau Blvd. 311 (photo credit: Ben Hartman)
Tent protest on north Tel Aviv's Nordau Blvd. 311
(photo credit: Ben Hartman)
Information provided by the Bank of Israel supports one of the claims made during last year’s protests over the cost of living: The price of housing services, rent, food, electricity, gas and water have increased at a more rapid rate than average income.
The information was contained in an excerpt from the central bank’s annual report, which it released to the press Tuesday. The full report will be published at the end of March.
“The available income of middle-class and upper-middle-class households increased since 1997 at a pace faster than that of the increase in prices in general, both on average and in most expense categories (excluding health insurance and expenditure on electricity, water, and gas),” the bank said.
“Nonetheless, since 2007, there has been an acceleration in the rate of increase in prices, and a comparison of the pace of increase in average income to the pace of increase in prices of goods and services from 2007 through 2010 shows that prices of goods and services that were at the core of protest – housing, food, electricity, gas, and water – increased at a higher rate than did income.”
Defining the middle class as those who earn between 75 percent and 125% of median income, the bank said its share among the overall population has decreased from 28.8% to 24.7% since 1997, primarily due to a similar increase in the proportion of the lower class.
From a demographic aspect, non-ultra-Orthodox Jews make up 90% of the middle class and more than 95% of the upper middle class, the report said. About half of the people in those classes live in households comprised of a couple and children, while an additional quarter of households are comprised of couples without children. Only in about 2% of middle-class households are there five or more children, while in the upper middle class the number of such households is nearly zero.