Israelis pay too much dough for their daily bread
Price-controlled bread costs dozens - sometimes hundreds - of times more than in U.S., Britain, and Australia.
Price-controlled bread in Israel costs dozens - and in some cases, hundreds - of times more than it does in some countries where the price isn't controlled, according to a study commissioned by TheMarker.
The Industry, Trade and Labor Ministry recently raised the price of regulated bread by 6.53 percent, blaming the rise on a worldwide increase in wheat prices.
But the study found that sliced white bread in Israel, at a price-controlled NIS 6.99 per 500 grams, costs 99 percent more than in the United States, 316 percent more than in Britain and 268 percent more than in Australia, after adjusting for purchasing power.
The study was conducted by the Public Trust organization, using the websites of Walmart stores in America, Asda and Tesco in Britain, and Coles in Australia.
"The biggest absurdity is that price-controlled bread in Israel, which is made from white flour rather than healthier whole-wheat flour, is more expensive than whole-wheat bread in the countries surveyed," Public Trust said in its report. "Sliced white bread in Israel costs 34 percent more than whole-wheat bread in the U.S., 316 percent more than whole-wheat bread in Britain and 145 percent more than whole-wheat bread in Australia (per 500 grams )."
Price-controlled sliced dark bread is also more expensive here, costing 50 percent more than in the United States, 212 percent more than in Britain and 176 percent more than in Australia.
Unsliced breads are cheaper. But even so, most price-controlled unsliced breads in Israel cost more than the equivalent sliced breads elsewhere. For instance, unsliced dark bread in Israel costs 108 percent more than sliced dark bread in Britain, 84 percent more than sliced dark bread in Australia, and about the same as sliced dark bread in America (none of the websites checked sold unsliced breads ).
Because the 6.53 percent rise in bread prices is ostensibly due to a global rise in wheat prices, the survey also checked whether prices are rising by similar amounts elsewhere. The answer is no. Over the past year, prices have risen by only 2.4 to 5.3 percent in America, and not at all in Australia. In Britain, the price of white bread has stayed flat while the price of whole-wheat bread plunged by over 30 percent.
"In other countries, due to competition and the recession, bakeries preferred to absorb the price increases," the report said. "Price increases affect bread manufacturers the same way worldwide. But in Israel, the [Industry Ministry's] pricing committee justified a significant rise in bread prices, while elsewhere no price rises have occurred."
Galit Avishai, CEO of Public Trust, said the ministry's pricing committee has "for years set bread prices much higher than the fair price," and this also sets the stage for increases in the price of bread that isn't price-controlled. Essentially, she said, the same ministry that indicted several bakeries just last week for acting as a price-fixing cartel is actually setting cartel-like prices for them.
The ministry said it can't evaluate the study's findings, since all the prices were adjusted for purchasing power. But many other countries have lower manufacturing or wage costs, it said, so the comparison may not be valid.
Nevertheless, it promised to investigate the matter thoroughly and soon.