Plan to Drop Bread Prices Gets a Rise Out of Bakers

The battle over the price of government regulated basic breads has erupted again.

The Industry, Trade and Labor Ministry announced yesterday that it is looking into lowering the price of bread due to the global decline in the price of wheat and fuel.

However, bakery owners say prices should not be lowered because they are still waiting for a promised 10-percent increase from 2007.

The Industry, Trade and Labor Ministry said an investigation by the supervisor of prices, Tzvia Dori, revealed that the prices of regulated breads should be lowered 7.4 percent due to decreased production costs.

However, the ministry has not yet received the accountant's report it commissioned regarding the amount of compensation bakeries should receive to offset their increased costs in 2007.

"I have directed the experts to work to lower most of the regulated prices of bread, and the public must feel this immediately," Minister Eli Yishai said.

Yohanan Aharonson, who represents the bakery owners in talks with the government, promised a fight if they did not get their increase.

"According to the calculations of 2007, we should have a 10-percent rise in the prices of regulated breads," he said. "Because of the decline in the prices of the components, a situation has been created that at most offsets what we should be getting. It is impossible to lower the price of bread, and if the minister does not work according to the set rules, we will fight with the help of our legal advisers. It seems to me that Yishai wants to run his election campaign on our backs."

The price of basic regulated breads, which include white bread, dark bread and challah, were last raised on April 16, 2008.

According to the government's agreement with the bakery owners, the price of basic breads that are regulated change according to production costs. The calculation, resulting in the "rules" mentioned by Aharonson, was devised by Professor Yitzhak Soari, an accountant, and is known as the "Soari formula."

In 2007, the government planned to deregulate bread prices entirely in exchange for compensation to the poor. However, the plan was not implemented.

The expectation of a slowdown and unemployment in the coming year, an election year, has increased sensitivity to the social aspects of bread prices.