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Hate Israel’s high cost of living? Don’t blame supermarket chains.

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One of the latest hot-button issues in Israel is the government Competition Authority’s investigation into possible price-fixing by two of the country’s largest supermarket chains, Shufersal and Rami Levy. Politicians and journalists are blaming the chains for the high cost of living in Israel. But while it is human nature to look for a scapegoat, the supermarkets are not the source of that problem.

In 2020, Shufersal had revenues of NIS 15.2 billion ($4.9 billion), and Rami Levy 6.46 billion ($2.1 billion). Net revenue as a percent of total revenue was 2.5 percent for Shufersal and 2.7 percent for Rami Levi. Profits in the global grocery industry are thin, averaging about 2 to 3 percent, and the two Israeli chains in question are at the industry average. If they were gouging consumers, one would expect them to have higher profit margins.

A favorite variation on the high-cost-of-living topic is to compare the cost of living in Israel with that of the US prices for many consumer goods are much lower in the US due to the country’s massive population of 330 million. With a market of that size, manufacturers can achieve levels of mass production that no........

© The Times of Israel (Blogs)

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