The wave of rising food prices shows no signs of abating. Yesterday Tnuva announced a price hike of an average of 7.3% on a range of products including delicacies, Mama Of meat products and Tirat Tzvi. Two weeks ago, Tnuva raised the prices of dairy products that are not subject to government price control. Food delivery company Wolt also announced a price increase this week.
These latest announcements by Tnuva and Wolt are another chain reaction in a kind of race started by Israel’s largest food importers and manufacturers. Over the past few weeks, every day or two another company has announced a price increase. It started with the Ministry of Agriculture announcing a 9.3% increase in the price of controlled dairy products, followed by a 5% increase in the price of controlled bread, and then the dam broke.
Central beverage companies (Coca-Cola), Javora and Tempo raised prices by 6.7% and Tnuva raised non-government price-controlled dairy products by an average of 4.65% while rival dairy company Tara raised dairy prices. its products by 7%. Strauss quickly got into the fray, raising dairy prices by an average of 2.33%. Gad Dairy raised prices by 5%.
Subsequent imports, Schestwitz and Diplomat, had price increases of 10% and up to 25%, respectively. Diplomat’s brands include Heinz, Pringles, Milka, Oreo, and Dijon. A diplomat made it clear that he is not raising the prices of products, which rose last year.
Osem last week raised prices for a product group from 2.5%-4.7% and Strauss announced increases averaging 1.4% for another list of products including elite instant coffee, powdered coffee, capsules, chocolate and oil snacks and potato chips, the first such hikes since Then the social protests in 2011.
Explanations and silences of retail chains
Almost every company has explained these increases due to the continued price increases that it absorbs into raw materials. For example, Strauss explained that the price of green coffee has increased by 45% since last December, the price of sugar has increased by about 13%, cocoa by 6.5%, and there has been a 50% increase in oil prices, as well as a 5.1% increase in the minimum wage.
Unilever is one of the only companies that, as of this writing, has not announced price increases, perhaps because it remembers the protests against the recent wave of price increases well.
Retail food chains, which only a few months ago served as a bastion of protest against price hikes at the end of last year, are now silent. At the end of 2022, they left the shelves empty and refused to agree to new price lists. This time they have not repeated similar messages, perhaps on the grounds that consumers do not want to pay more, but they also do not have the energy for further protests.
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According to an industry source, it is not that all companies are inciting each other to raise prices, but rather “the understanding that the government is weak in this area, and that the public accepts the situation relatively easily.”
At the end of the struggle between the marketing chains, led by Schoversall, with suppliers such as Unilever and Tnuva for several months, they could not completely prevent price increases but only to calm them – instead of increasing prices by 20-30%, most of the price increases amounted to up to 10% .
See the impact of higher interest rates on decreasing consumption
The impact of rising prices and the hardships faced by households was evident this week in data published by the Central Bureau of Statistics, which indicated a 1.7% decline in private consumption in the first quarter of 2023.
Alex Zapczynski, chief economist at Mitav Dash, explained that “Although the first quarter data should be taken with a grain of salt, it is reasonable to expect that private consumption will moderate. We are seeing the impact of the increase in interest rates, which are at their highest levels since Nearly 20 years ago, it reduces the disposable income of families.”
Published by Globes, Israel business news – en.globes.co.il – on May 18, 2023.
© Copyright Globes Publisher Itonut (1983) Ltd., 2023.