Consumers left helpless as food price hikes proliferate

Dairy products credit: Globes
Dairy products credit: Globes

Government, retail chains and consumers themselves have quietly accepted the incessant wave of price rises in Israel.

The wave of food price rises shows no signs of abating. Tnuva yesterday announced price rises averaging 7.3% of a range of products including delicacies and its Mama Of and Tirat Tzvi meat products. Two weeks ago Tnuva raised the prices of dairy products that are not under government price control. Food delivery company Wolt also announced a price hike this week.

These latest announcements by Tnuva and Wolt are another chain reaction in a kind of race that was started by Israel's largest importers and food manufacturers. Over the past few weeks, every day or two another company has announced a price increase. It began with the Ministry of Agriculture announcing a 9.3% rise in price of controlled dairy products, and was followed by a 5% increase in the price-controlled bread, and then the dam broke.

Drinks companies the Central Bottling Co. (Coca Cola), Jafora and Tempo put up prices by 6.7% and Tnuva raised the prices of dairy products that are not under government price control by 4.65% on average, while dairy rival Tara hiked the prices of its products by 7%. Strauss quickly entered the fray, hiking prices of its dairy products by an average 2.33%. The Gad dairy raised prices by 5%.

Next importers Schestowitz and Diplomat weighed in with 10% and up to 25% average price hikes respectively. Diplomat's brands include Heinz, Pringles, Milka, Oreo and Dijon. Diplomat clarified that it is not hiking the prices of products that were hiked last year.

Last week Osem put up prices of a range products from 2.5%-4.7% and Strauss announced hikes averaging 1.4% for another list of products including Elite instant coffee, dried coffee and capsules, chocolate snacks, oil and potato chips the first such rises since the social protests in 2011.

The explanations and silence of the retail chains

Almost every one of the companies explained the hikes as due to continuous price increases that they are absorbing in raw materials. For example, Strauss explained that the price of green coffee has increased by 45% since last December, the price of sugar is up by about 13%, cocoa by 6.5% and there has been a 50% increase in the prices of the oils, as well as a 5.1% increase in the minimum wage.

Unilever is one of the only ones that, as of this writing, has not announced price increases, probably because it well remembers the protests against its most recent wave of price increases.

The retail food chains, which only a few months ago stood as a bulwark protesting consumers against price increases at the end of last year, are now remaining silent. At the end of 2022, they left shelves empty and refused to approve the new price lists. This time they have not repeated similar messages, perhaps with the understanding that consumers do not want to pay more, but also haven't got the energy for more protests.

According to an industry source, it's not so much that all the companies are egging each other along to raise prices, but rather "an understanding that the government is weak in this field, and that the public is accepting the situation relatively easily."

At the end of the struggle between the marketing chains, led by Shufersal, with suppliers such as Unilever and Tnuva several months ago, they were unable to completely prevent the price increases but only to moderate them - instead of a 20-30% price increase, most of the price increases amounted to up to 10%.

Seeing the effect of interest rate hikes in reduced consumption

The impact of price increases and the difficulties faced by households was shown this week in data published by the Central Bureau of Statistics, which indicated a 1.7% decrease in private consumption in the first quarter of 2023.

Meitav Dash chief economist Alex Zabeshinsky explained, "Although the data for the first quarter should be taken with a pinch of salt, it is reasonable to expect that private consumption will moderate. We are seeing the effect of the increase in interest rates, which are at their highest in almost 20 years, and it is reducing households' disposable income."

Published by Globes, Israel business news - - on May 18, 2023.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.

Dairy products credit: Globes
Dairy products credit: Globes
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