Israel has secured the top spot on a list it would like to be lower down on: developed countries with the highest cost of living, according to data released on Sunday by the Organization for Economic Cooperation and Development (OECD).

The comparative index, which examines variations in general price levels across countries using consumer price indices and purchasing power parity ratios, revealed that Israel’s prices were 38 percent higher than the OECD member country average. Switzerland followed closely in second place, trailed by Iceland and the United States in the third and fourth positions, respectively.

Israel’s economy exhibits a distinctive over-concentration in specific sectors, particularly food and household goods, in contrast to other global markets. A State Comptroller report noted that between 2015 and 2020, the collective market share of the ten largest suppliers in the food and consumer products industries was around 54% on average. Additionally, the largest market share in the food industry in 2020 was held by a single supplier with approximately 12% control over the entire market.

The elevated cost of some fundamental consumer goods, such as milk, bread, and cheese, showcases a 50% to 70% disparity between Israeli prices and the average price levels in OECD member countries.

In response to the OECD data, Ron Tomer, the head of the Israel Association of Manufacturers, highlighted the structural challenges that contribute to Israel’s elevated price levels. He cited foreign exchange rates as a primary influencer, along with factors like housing costs, high VAT on food, limited direct support for agriculture, and extensive regulatory burdens.

Tomer expressed, “The Israeli food industry must be supported and encouraged along with an immediate VAT reduction on food products to the level accepted in Europe.”

In recent months, the government led by Prime Minister Benjamin Netanyahu has faced criticism for its focus on judicial reform while neglecting the issue of rising prices. In June, the government established a ministerial committee to address the high cost of living, headed by Netanyahu himself. The committee comprises 13 ministers, overseeing various ministries such as finance, economy, agriculture, and more.

The Israeli public is grappling with the challenge of escalating living costs, compounded by trimmed economic growth forecasts and global economic slowdowns. Concurrently, rising interest rates have led to increased expenses in mortgages and loans.

The Israel Democracy Institute’s survey, conducted earlier this year, underscored the public’s concern about the high cost of living. A majority of respondents attributed the issue to government inaction, with food prices being the most significant concern for two-thirds of those surveyed. Housing costs and indirect taxation were also prominent sources of apprehension.

The survey found that only a minority of respondents held large monopolies, local manufacturers, importers, or supermarket chains responsible for the high cost of living.

(YWN World Headquarters – NYC)