Lapid should cut down the cost of living in Israel - editorial

As we approach another election, it seems increasingly apparent that the cost of living has become a major campaign issue, if not the most important one.

 Prime Minister Yair Lapid at Sunday's cabinet meeting, July 17, 2022.  (photo credit: MARC ISRAEL SELLEM/THE JERUSALEM POST)
Prime Minister Yair Lapid at Sunday's cabinet meeting, July 17, 2022.
(photo credit: MARC ISRAEL SELLEM/THE JERUSALEM POST)

As the cost of living rises rapidly in Israel, perhaps the one thing Prime Minister Yair Lapid’s caretaker government can do is come up with a workable plan to stem the spike in prices.

In the latest rises, the Schestowitz Company announced this week that it was increasing the prices of its range of food products for the second time this year, first by 12% and now by up to 14%. Among others, the prices of its pasta and rice products, tuna, sauces, soup nuts and chocolates are going up from 5% to 14%.

The company’s announcement followed a spate of similar ones by other firms, including the Israel division of Kimberly-Clark, which is raising the prices on most of its products to retail chains by 5.5% to 9.6%.

Although these prices affect all of us, especially the poor and the needy, this is a particularly harsh blow to large families, because its products include diapers, wipes, tissues, toilet paper, hygiene and care products, and home cleaning supplies.

A poor example

So far, instead of finding ways to counter the hikes, the government is providing a poor example. The Economy and Industry Ministry announced last Wednesday that the price of government-regulated bread would rise by 20% as a result of the global rise in food prices affecting production costs in Israel.

Illustrative photo of Israeli money (credit: MARC ISRAEL SELLEM)Illustrative photo of Israeli money (credit: MARC ISRAEL SELLEM)

Economy and Industry Minister Orna Barbivay insisted that keeping basic bread products under government supervision helps prevent further price hikes by retailers.

“I call on retail stores to consider a partial increase of the price of supervised bread so as to show some consideration for consumers,” she said.

“I call on retail stores to consider a partial increase of the price of supervised bread so as to show some consideration for consumers.”

Orna Barbivay

Lapid intervened, held an urgent meeting on the subject and issued a statement that he had “ordered an investigation into all possibilities, beginning with expanding controls on bread, to the indemnification of bakeries in order to curb the increase in the price of bread.”

The statement said that Lapid was looking into the possibility of expediting legislation to stop the price increases, which would be a welcome step in the right direction.

In fact, in a bid to protect consumers, the big supermarket chains agreed two days later to freeze the prices of bread.

This is not how things should work.

The government should be leading the way in ensuring that prices of basic products, which are already more expensive in Israel than most other countries, are lowered as much as possible.

While we welcome Tuesday’s launching by Transportation Minister Merav Michaeli of the “Zahav Kav” card allowing free public transportation throughout the country for those aged 75 and over, this is a drop in the bucket.

The signs are here for all to read, starting with the Bank of Israel’s latest interest rate hike to restrain inflation and ending with the resumption of popular protests on Tel Aviv’s Rothschild Boulevard and across the country against rising costs.

The Central Bureau of Statistics announced that the Consumer Price Index rose 4.4% in June, the most since November 2008, feeding expectations for another increase in interest rates by the central bank.

The Bank of Israel is expected to raise interest rates again at its next meeting in August after three consecutive increases since April that have taken the benchmark rate to 1.25%, the highest in nine years.

While the bank’s moves make sense, the government cannot and must not let rising inflation and costs spiral out of control.

Here’s a genuine suggestion: Lapid, a former finance minister himself, should get together with Finance Minister Avigdor Liberman and other ministers with economic portfolios and roll out clear ways to restrain the price of basic products as well as housing.

As we approach another election, it seems increasingly apparent that the cost of living has become a major campaign issue, if not the most important one. As voters, Israelis should insist that every party presents a clear economic platform of their plans so we know now where they stand.

In the meantime, though, it is the government in office that should take the initiative and come up with a new and effective plan to keep inflation, the cost of living and the prices of basic products down.