Bethel Finances: Knesset c'tee to probe food prices after "Globes" report

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Bethel Finance news:
Knesset Economic Committee chairman Carmel Shama has announced that he will convene the committee to discuss the question of food prices in Israel, in the wake of a "Globes" investigative report. "The prices of basic products are a blow to the middle classes, and condemn the poorer sections of the population to the oppression of an intolerable daily diet. In many cases, it is a matter of local market failure," Shama said.

The report, published this week, found that food prices in Israel are higher by tens, and even hundreds of percentage points than prices in Western countries. For example, prices of milk, yogurt, flour, olive oil, and other products are two to three times higher in Israeli stores than in German chain Aldi.

Food companies in Israel raise prices suspiciously close to one another, particularly considering that each supplier and each product is affected differently by world prices of raw materials, and the futures contracts of each expire at different times.

Although prices of most raw materials have risen this year, in most cases prices are still far from the peaks seen just before the global financial crisis in 2008.

Meanwhile, the wave of food price rises continues. "Globes" has learned that Strauss Ice Cream Ltd., owned by Unilever, is raising the prices of its products by an average of 2.4%. This is an unusual move, as in the ice cream market it is normal to raise prices only once a year, and Strauss did so in November 2010, when its prices rose by an average of 3.5%. "I'm in shock. It's all to boost profitability. What's happening now shows the lack of competition," was the response of one senior retailer to the announcement by Strauss Ice Cream.

Lehman Schlissel is also raising prices. Initially, its Ferrero Rocher line will rise by 5%, and the company plans rises of 7-8% on other products by the end of the year.

Osem has informed retailers that it intends to raise prices of cordials, even though sugar prices have fallen.

Suppliers who spoke with "Globes" in the wake of the report admitted that they refrained from lowering prices when raw materials prices fall, for fear that it might be difficult for them to raise prices again later. One supplier claimed that he ran many bargain campaigns with retailers when raw materials prices fell. The "Globes" report made waves among retailers and consumers, some of whom have called for a boycott on companies that raise prices.