Country with highest cost of living – Israel?

Cost of living index indicates that price levels were a whopping 38% higher than in average OECD member countries during last year.

By World Israel News Staff

Israel clinched the top spot in the ranking of developed countries with the highest cost of living in 2022, according to data released by the Organization for Economic Cooperation and Development (OECD) on Sunday.

The data indicates that prices in Israel were 38% above the average of OECD member countries.

The index used for this analysis gauges disparities in the general price levels across countries, utilizing consumer price indices and the comparison of purchasing power parities to market exchange rates.

Following Israel in the ranking was Switzerland, with Iceland and the US coming in third and fourth respectively.

Certain sectors in Israel, notably food and household goods, display a high degree of market concentration when juxtaposed with other global markets. A report from the State Comptroller outlined that, between 2015 and 2020, the 10 most dominant suppliers in the food and consumer product industry held an average market share of 54%.

In 2020, the supplier with the most substantial market share accounted for approximately 12% of the total food market. Remarkably, basic consumer goods such as milk, bread, and cheese are priced 50-70% higher in Israel compared to the average price in OECD countries.

Ron Tomer, the head of the Israel Association of Manufacturers, commented on these findings. He pointed out structural issues in the Israeli market leading to these heightened prices, noting that foreign exchange rates are a significant factor.

“Housing prices, the high VAT rate on food, and the lack of direct support for agriculture, and heavy regulation drive prices up,” The Times of Israel cited Tomer as saying. “The Israeli food industry must be supported and encouraged along with an immediate VAT reduction on food products to the level accepted in Europe.”

He advocated for urgent support for the Israeli food industry and suggested a reduction in VAT on food items to levels observed in Europe.

In June, the government disclosed the establishment of a ministerial committee, aiming to address the high living costs.

This committee, led by Prime Minister Benjamin Netanyahu, comprises 13 ministers responsible for portfolios including finance, economy, agriculture, and housing, among others.

The report cited a study from the Israel Democracy Institute from earlier this year that revealed the high cost of living as a primary concern for most Israelis.

Two-thirds of the survey’s participants identified food prices as the main contributing factor, followed closely by housing and indirect taxation.

The survey also highlighted a prevalent sentiment among the public: the government’s inaction is chiefly to blame for the high living costs, with only a fraction of respondents attributing responsibility to large monopolies (27%) or local industries (3-4%).