BoI: Prices still far higher here than rest of OECD

Gap between Israel and rest of the developed world appears to be growing, according to Bank of Israel.

Stanley Fischer at press conference in Jerusalem_311 (photo credit: Reuters)
Stanley Fischer at press conference in Jerusalem_311
(photo credit: Reuters)
Israelis pay considerably more for consumer goods than their counterparts in the rest of the developed world, and that gap appears to be growing despite last year’s protests over the cost of living, according to a report released Wednesday by the Bank of Israel.
The price of food was 15 percent higher in Israel than the OECD average in 2008, the most recent year for which figures exist, and almost 20% higher than it was in countries with similar levels of wealth, the report said. Since then the price of food has risen about 10% more in Israel than in euro-bloc countries, it added. It based that estimate on changes to consumer prices, the shekel-euro exchange rate and the respective levels of GDP per capita in Israel and Europe.
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Relatively high value-added tax (16%) and a lack of competition for certain products are partly to blame for the high price of food, the report said. Vehicles, hotels, restaurants and cultural and leisure services were also found to cost significantly more than in other developed economies.
Figures supplied for 2008 by the OECD and reproduced in the report showed that Israelis paid more in almost every category than in other developed countries. Vehicles were 70% more expensive in Israel than the OECD average, nonalcoholic drinks cost 48% more, dairy and egg products cost 44% more and meat cost 28% more.
Only fruit, vegetables and communications products were cheaper in Israel than the average. This was despite Israel ranking No. 23 for GDP per capita in the 34-nation bloc in 2008, at $27,464.