Israeli consumers angry over cost-of-living hike

Finance Minister Avigdor Liberman entered the conference room of his faction in the Knesset Jan. 31, and, as usual, gave the journalists an opportunity to ask questions before the open microphones and cameras.

High on the agenda was the inflation wave that has swept the economy. One after the other, the large food companies announced that they were raising prices up to 15% of popular products such as pasta noodles and ketchup. Simultaneously, it was announced that fuel prices are expected to rise by about 5%. This is in addition to the prices of electricity that have already risen by 6%.

Mass protests have begun to appear in recent days in the social networks, including calls for boycotting pasta produced by Osem, Israel’s largest food company. In parallel, public anger was also directed at the Change coalition and at Liberman himself.

The finance minister refused to get flustered by the hard questions directed at him at the Knesset. Instead, he prided himself on the strengths of the Israeli economy. He said that the price rise of electricity has been the most moderate in the world. At the same time, he criticized the food manufacturers. The minister warned the food companies that “the situation mustn’t be cynically exploited,” and that he will take punitive measures if they go ahead with planned price hikes.

However, Liberman’s words only fanned the fires of the public fury that has started to accumulate. He sounded like he was ignoring the distress of the people. Meanwhile, the media focused on this issue and the headlines discussed how much the rise in prices would affect the consumers: It was estimated to reach thousands of shekels a year per household.

Liberman was correct in judging the Israeli economy as excellent. According to Israel’s Central Bureau of Statistics data from the past week, the recovery of the labor market continues, with unemployment rate now nearing (low) pre-coronavirus pandemic levels. The hi-tech engine brings millions of dollars to Israel, and the macro data is encouraging.

Still, all this means nothing to the millions of citizens who will suffer from these price hikes.

People remember that several Cabinet members of the Change government had spent years attacking the previous government and its leader, then-Prime Minister Benjamin Netanyahu, for wasting money and for ignoring Israel’s rising cost-of-living index. People remember how Prime Minister Naftali Bennett promised last year, when he was still only member of the Knesset, to lower taxes via the Singapore economics model. They also remember how Foreign Minister Yair Lapid presented himself — when entering into politics — as the leader of the Israeli middle class, collapsing under the taxation yoke. Old videos of the populistic economic promises current Cabinet ministers are now turning viral.

A significant portion of the ridicule on the networks is directed at Lapid, who conducted a campaign in the past under the heading, “Where is the money?” In this campaign, Lapid accused Netanyahu’s government of waste and for trampling on the middle class. In light of this, even Lapid was forced to address the wave of price increases and, like Liberman, accused the food manufacturers. “The best plan is to first of all postpone tax payments, and then provide compensation in accordance with the decrease in income over a certain percentage. … I am not talking about the big [food] chains. They’re doing great, and they should know we won’t hesitate to act against them. There is a difference between price hikes — and overpricing and shameless monopolistic behavior.”

Lapid continued, saying, “I’m talking about soundmen who didn’t have work for two months, about small stores that no one has entered for a month already, about an events hall that suffered a long list of cancellations.” Will Lapid’s emphatic words suffice to deflect public anger away from the government? Not so sure.

The one who took advantage of the opportunity to crack down on his opponents was opposition chair Netanyahu. His social media accounts were full of reports about the raising of prices, and created a campaign directed against the “Bennett-Lapid government.” In a video disseminated by Netanyahu, the latter appears to watch Lapid publicly making fierce promises to lower the cost of living. After watching Lapid, Netanyahu reacts with scorn, saying, “They are raising taxes on basic products, on gas, electricity, water. Soon they will raise taxes on the oxygen we breathe. It doesn’t bother them at all. … But you know how much it bothers Israeli citizens. Soon enough, we’ll move them out of the way.”

Someone else who did not give up an opportunity to strike at his rival, was Shas Chairman Aryeh Deri. His target was Liberman. Deri launched a populistic campaign, showing a poor ultra-Orthodox boy standing next to his mother; the child is crying because his mother could not afford to purchase foodstuffs in the supermarket.

At this point, demonstrations were organized opposite the houses of Bennett, Liberman and Lapid. After a few days, the Change government understood that they were beginning to lose points even within their own camp.

This seems to be the reason that Minister of Transport Merav Michaeli, together with Liberman, decided to postpone a 9% price hike in public transportation that was planned for Feb. 2. Michaeli tweeted, “We wanted that the state take on itself as much as possible, so that you [the citizens] will be adversely affected as little as possible. So we curbed the rise in prices that was supposed to begin yesterday. We will use the coming months to test the price structure in the public transportation system, so that the latter serve the public as best as possible, and allow for a higher level of service.”

The consumer protests, together with government pressures, left its mark. One after another, the giant food chains announced that they would freeze the wave of price increases until after Passover, which is three months away. These changes have lowered public protests, but the government — and mainly Liberman — will have to come up with better answers to a weary, exhausted public after two years of COVID-19.