Ex-Bank of Israel Gov. Weighs In on Inflation, Rise in Prices
This week, the government announced the rollout of a plan to reduce the cost of living in Israel. It includes tax credit for working parents, tariff reductions, and increased negative income tax for low-wage workers.
The plan comes in response to consumer protest regarding inflation, a word that has been on the financially conscious Israeli’s mind for the past few weeks as a developing wave of increased prices has crashed over the nation.
Over the course of 2021, Israel’s consumer price index – a key statistic used to measure inflation – rose by 2.8%. While that number pales in comparison to other nation’s inflation rates during the COVID-19 pandemic’s second year, it looms over Israel’s rate over the last several years, which has consistently remained close to 0%.
One of the driving factors behind the current trend of inflation is an increase in the cost of food. The most notable instance of this unfolded earlier this month, as food mega-manufacturer Osem (a subsidiary of Nestlé) announced that it would be increasing the prices of its products by as much as 5% due to higher costs of packaging, transport and raw materials.
This spurred severe pushback from community leaders, the public, and the finance and economy ministers, the latter of whom co-wrote a letter to food manufacturers in Israel urging them not to raise their prices, lest they face government intervention.
Additionally, residents of Israel grew restless when, on February 1, the government introduced increased tariffs on electricity (which has been addressed, at least in part, by the government’s aid plan), and raised the maximum price for standard 95 octane gasoline.
The cost increase of electricity and gasoline reflects global increases in material costs. The Electricity Authority directed blame toward the rising cost of coal as a primary cause for the rise in electricity production costs. The Energy Ministry indicated that gas prices are rising in tandem with the surging price of crude oil.
These climbing raw material costs have led to significant supply shortages; the raw materials are only one link in a chain of compounding issues plaguing the global economy. (JPost / VFI News)
For the love of money is a root of all kinds of evils. It is through this craving that some have wandered away from the faith and pierced themselves with many pangs. - 1 Timothy 6:10