JACQUES BENDELAC. In all wars, there are profiteers and Israel is no exception to this rule; otherwise, it would be impossible to explain why the consumer experiences price increases that are economically unjustifiable.
The drop in the price index in September (-0.2%) is rare enough to be highlighted, and for good reason: prices in Israel almost never fall. Over the last twelve months, the rate of inflation remains high (3.5%).
Since the start of the war, price increases have been consistent and similar while corporate profits have soared. The phenomenon now has a name in French: “cupideflation”, translation of the English term “greedflation” (from the English greedgreed) which designates the strategy by which manufacturers, distributors and producers fuel inflation by inflating their margins.
In other words, companies are taking advantage of the war to raise their prices and increase their profits.
War profiteers
While it is logical that retail prices rise when production costs (such as transport, energy and raw materials) rise, the opposite should also be true. However, in Israel, prices almost never fall, even when production costs fall.
In 2024, the price rise in Israel therefore lives up to its name: cupideflation. Many companies took cover behind the war to artificially raise prices and make big profits.
In other words, it is the corporate profit margin that is responsible for a large part of the price rise in Israel. In all sectors dominated by a monopoly or a small number of producers, profits have soared and prices have followed.
Guilty consumer
In their daily lives, Israelis are increasingly confronted with exaggerated price increases. As proof: in aviation (El Al), distribution (Shufersal), food (Strauss, Tnuva) and clothing (Castro), large Israeli companies achieved exceptional profits in the half-year of 2024 and the trend continues. continues.
Some will suggest that the consumer is responsible for the unjustified rise in prices; nothing forces him to buy a product that seems expensive to him. This is true in theory but difficult to achieve in practice.
Manufacturers know well that Israelis will find it difficult to do without tomatoes, trips abroad or party gifts; in times of war in particular, the consumer does not mind boycotting an expensive item in order to lower the price. Many producers and distributors quickly understood this and took advantage of it to push prices up, well beyond the increase in their production costs.
The current war is indeed a pretext for rising prices; in a tense context, consumers are not reacting to the high cost of living and Benyamin Netanyahu's government has other fish to fry…
Israeli companies have therefore become followers of greedflation; it would have been a shame not to take advantage of it…
T.O.I.
about the author
Jacques Bendelac is an economist and social science researcher in Jerusalem, where he has been based since 1983. He has a doctorate in economics from the University of Paris. He taught economics at the Higher Institute of Technology in Jerusalem from 1994 to 1998, at the Hebrew University of Jerusalem from 2002 to 2005 and at Netanya University College from 2012 to 2020. He is the author of numerous works and articles devoted to Israel and Israeli-Palestinian relations. He is notably the author of “The Arabs of Israel” (Autrement, 2008), “Israel-Palestine: tomorrow, two partner states? » (Armand Colin, 2012), “Israelis, hypercreative! » (with Mati Ben-Avraham, Ateliers Henry Dougier, 2015) and « Israel, instructions for use » (Editions Plein Jour, 2018). Latest work published: “The Netanyahu Years, Israel’s great shift” (L’Harmattan, 2022). He regularly comments on economic news in the Middle East in the French and Israeli media.
