Treasury: Israeli prices far higher than OECD average

New cars Photo: Tamar Matsafi

The Ministry of Finance chief economist found prices of cars and electrical products 52% higher than the OECD average.

Israelis would enjoy a far higher standard of living were it not for the high cost of living, the weekly survey published by the Ministry of Finance chief economist concludes. The chief economist stresses that prices in Israel are higher, often by tens of percentage points, that is acceptable in OECD member countries and the problem is especially severe in the transport, hotels and electrical products sectors.

The chief economist says that price differences between Israel and other developed countries can reach 52% with durable goods such as cars and electrical products, 30% in transport and 29% in restaurants and hotels. The chief economist thinks that exposing sectors to more competition will help lower the cost of living and improve Israel's ranking in GDP per capita.

Regarding the connection between the standard of living and prices, the chief economist writes, "In a structured way, the more a country is developed, on average, the level of prices in it rises. The more the standard of living rises, then salaries tend to rise accordingly."

GDP per capita in Israel is about $3,200 annually - a figure which puts Israel in 20th place among OECD countries, just behind France.

However, when comparing GDP per capita in terms of purchasing power (PPP), Israel slips three places behind Italy, Spain and the Czech Republic. The explanation for this difference is the level of prices in Israel, which is high by international comparison with prices particularly high in durable goods, transport, restaurants and hotels. The only prices that are relatively low in Israel are in telecommunications, fruit and vegetables and education.

Published by Globes [online], Israel business news - www.globes-online.com - on August 7, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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New cars Photo: Tamar Matsafi
New cars Photo: Tamar Matsafi
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