Yishai Threatens Coalition Crisis Over Bread Prices

Flour jumped 35-40% in price today but the poor can't afford more. Let the gov't find a way, minister says

The bread war is taking shape, following the 35%-40% leap in the price of flour. The bakeries threaten to stop making the regulated forms of bread and Industry minister Eli Yishai, whose mandate includes regulation of staples, is threatening a coalition crisis unless the cabinet promises to subsidize bread in general or compensate the poor somehow for the hike.

Yishai refused to allow the bakeries to raise the price of staple breads despite the steep increase in their cost of flour, for the sake of the poor. "They don't have enough money to buy bread to start with," the minister said.

The bakers' representative in the talks with the government, Yochanan Aharonson, said today that he would wait for Yishai to return from a meeting with the prime minister to discuss alternatives. But a solution had to be found or the bakeries would shut down operations, he said. "Who can sell regulated bread with flour that expensive?" Aharonson said, suggesting one possibility - government subsidies.

While lending an ear to the bakers' arguments, Yishai has adamantly refused to allow them to raise the prices of staple bread.

The sudden jerk in prices results from spiking flour prices in world markets, by about 30% in the last month, while in parallel the dollar has rebounded against the shekel.

Wheat prices jumped to a 12-year high because grain inventories around the world shrank, and on news that harvest delays are expected in the U.S. - the world's largest wheat exporter.

Also, growing demand for wheat in China as the economy there booms has added pressure on prices.