May 23, 2016

A Loaf of Bread is Even Cheaper in Israel as Prices Rise Ever so Slowly

Tel Aviv…Although it is known as the “Land of Milk and Honey,” Israelis always felt secure with bread and butter. While prices of milk and honey have often risen steeply over the years, bread was far lower than people are used to paying in other Western countries. One reason is that the government has traditionally subsidized wheat prices, which really meant that it controlled the price of bread. The government subsidies kept prices down even while commodity price on the world market soared. In recent months, global wheat prices fell prompting Israel’s government to pass on some of the savings to consumers.

Prime Minister and Minister of Economy and Industry Benjamin Netanyahu and Minister of Finance Moshe Kahlon last week signed an order cutting prices of price-controlled bread in Israel by 3.24%, following a recommendation by a joint committee of the Ministry of Economy and Industry and the Ministry of Finance. Global wheat and food prices have been in a prolonged downtrend. Kahlon said, "We are lowering the prices of price-controlled bread in order to lighten the burden on households and lower the cost of their grocery basket. Cutting the price of price-controlled bread will help disadvantaged families and the middle class, for whom brown bread is a basic product in the shopping basket."Israelis seemed to have fared better than expected during the recently concluded Passover holiday. Prices are said to have risen less than 5% overall with many items staying at year-round prices. An Israeli food expert says that “prices in Israel continue to rise ever so slowly but thankfully within range of overall inflation and wages.”