The price rises that we suffered in 2007 for food, water, electricity, gas and many other goods and utilities was just the beginning: 2008 is about to start with a big round of further price increases.
The large food companies intend to raise the prices of many of their products by an average of 5-10 percent during the coming year, as a result of the increase in raw material and commodity prices all over the world in 2007, as well as shortages in milk powder, sesame and others.
Some companies have made it clear that there will be several rounds of price hikes, since the rise in raw material costs is not expected to end anytime soon. One large firm even said that its 2008 workplan, prepared only a few weeks ago, is no longer relevant since the changes in raw material prices is so much more rapid than the company had assumed initially.
A survey by the Manufacturers Association shows that the next round of price increases will mostly be for food and cleaning products. Paper goods will probably not be affected. The association forecasts average price increases of 7 percent for 2008.
Other price rises expected in 2008 include electricity rates. The Israel Electric Corporation (IEC) claims unanticipated increases in fuel costs over the summer caused it unprecedented losses, and the company is demanding higher rates to cover its costs. The IEC wants a 10 percent increase in electric rates.
Other expected increases are for water, after the cabinet approved an increase in the production of desalinated water, the cost of which is high. Water prices are expected to rise by a total of 20 percent, spread out over several years.
Surprisingly, taxi prices rose only 5 percent in 2007 and bus and train prices remained unchanged. But this cannot last long, as diesel fuel prices for transportation leaped 52.5 percent in the past year, and there will certainly be no way to keep public transport costs stable any longer.
The cost of various raw materials used in construction, such as iron and steel, will force rises in new apartment prices, though at less steep rates.
The increase in the minimum wage scheduled for June 2008 will most likely bring on more price increases in products of traditional industries. Senior executives say they see no end in sight for these rounds of price increases either.
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