Netanyahu must focus on lowering Israel's cost of living Analysis by The Jerusalem Post

A day after the cabinet approved the formation of the Ministerial Committee on the Fight against the Cost of Living, Prime Minister Benjamin Netanyahu convened the committee for the first time in Jerusalem on June 5.

“Prices in Israel are significantly higher than they are on similar or identical products in most developed countries,” said Netanyahu, who heads the committee. “There is no objective justification for these gaps. There are geological layers here of open and hidden monopolies and all kinds of impediments to competition. Additionally, I have gained the impression recently that the importers, manufacturers and distributors have simply lost their restraints, The Jerusalem Post reports.

“We are meeting here, and we will meet from time to time, because we are going to evaluate this and we are going to fight it. This has not been decreed by fate. Israel does not need to be more expensive than most developed countries. Together with my government colleagues and the professional teams, we will wage a determined battle against the cost of living.”

In addition to the prime minister, the committee comprises 12 other ministers, including committee deputy chairman Finance Minister Bezalel Smotrich, Economy Minister Nir Barkat, Agriculture Minister Avi Dichter, Environmental Protection Minister Idit Silman and Energy Minister Israel Katz. It will also include the directors-general of the Prime Minister’s Office and the Finance, Economy and Agriculture ministries, the head of the National Economic Council, the head of the Finance Ministry’s budget department and the Bank of Israel governor.

The cabinet move is long overdue and its delay is glaring, as the government has been mired down in its ambitious judicial overhaul that has divided the country.

The battle against rising prices and inflation should have been the priority from day one of the government’s existence.

Opposition members of Knesset made a salient point in arguing that such a committee already exists – the socioeconomic cabinet, which the prime minister also leads and which has not convened since the government’s formation last December. The committee, they argued, is the sixth appointed by the government in the last 12 years to deal with the increase in prices, and just adds to government bureaucracy.

The cost of living crisis in Israel is only getting worse

Regardless of that fight, a look on the ground is alarming. The Consumer Price Index has risen 5 per cent over 12 months (April 2022 to April 2023) and 2 per cent since the new government was sworn in at the start of the year, according to the Central Bureau of Statistics. At the same time, the Bank of Israel has raised interest rates incrementally to 4.75 per cent, the highest level since 2006, in an effort to curb inflation.

So far, the government has not taken any significant measures to combat the rising cost of living and inflation. It has taken some steps, including a plan to bring in thousands of workers from India and China to help lower costs, and Foreign Minister Eli Cohen signed an agreement with his Indian counterpart, Subrahmanyam Jaishankar, on May 9 to allow 42,000 Indians to work in Israel, 34,000 in construction and 8,000 in nursing. But economic experts say that much more needs to be done in every sphere of the economy.

According to the Numbeo website, the cost of living in Israel is, on average, 4.7 per cent lower than in the United States, although salaries in the US are generally higher.

A single person’s estimated monthly costs are on average NIS 3,756 ($1,005) without rent, while those of a family of four amount to NIS 13,207 ($3,530) without rent. And rents and mortgages, as many Israelis know too well, are spiralling across the country.

The challenge facing the new committee is enormous. While prices of basic food items and services continue to go up, many Israelis are struggling to make ends meet. When Netanyahu served as finance minister two decades ago, he was credited with steering Israel out of its worst recession and performing what was called “an economic miracle.”

We can only hope that the prime minister and his new committee will use this opportunity to focus on seriously tackling the issue that clearly tops the national agenda for most Israelis – making life in Israel more affordable for all its citizens. More than another committee, we need lower prices.