The Times of Israel newspaper said that with the beginning of 2025, Israelis woke up to sharp increases in taxes, prices of basic materials, and utility bills, which sparked a wave of dissatisfaction among Israelis who suffer from an increasing burden of living.
Although the government announced a series of economic reforms aimed at reducing the financial burden and enhancing competition, doubts remain about its ability to achieve tangible results in light of the control of monopolies and structural obstacles, according to the newspaper.
Reforms to reduce costs
The Israeli newspaper indicates that, led by the Ministry of Economy, and in cooperation with the Ministries of Health and Energy, the new reforms aim to reduce bureaucracy and reduce costs through harmonization with European standards.
From now on, importers will not have to conduct costly local tests on imported products to ensure their compliance with Israeli standards. Instead, they can rely on European conformity certificates, which speeds up the entry of products into the market.
The Ministry of Economy estimates that these changes could save importers between 8% and 16% of the value of imported goods, with promises that these savings will be reflected on consumers. However, experts express doubts that this will lead to a real reduction in prices, especially with a few large companies dominating the markets.
Target sectors
According to the Times of Israel, the reforms mentioned cover multiple sectors, including household appliances, baby products, and cosmetics. For example:
- In the cosmetics sector, eligible importers will be able to bring in products legally marketed in Europe, Switzerland and the United Kingdom, except for preparations such as sunscreens and products for children under 12 years of age. Expectations indicate savings ranging between 7% and 9%.
- In the household products sector, repairs include thousands of products such as toys, chairs and kitchen items. It is estimated that these changes could reduce costs by up to 16%.
However, legal obstacles remain. According to Rachel Gore, former representative of Lobby 99, there are thousands of unclear standards buried in laws and ministerial decisions dating back decades. She added, “There are 530 official standards for non-food products, and 130 standards for food products, but this is only part of the problem. The other standards are scattered in old legal and administrative texts.”
Impact on the food sector
According to the newspaper, reforms in the food sector seek to simplify import operations and reduce bureaucracy. Companies qualifying as “verified” importers will be able to import food products marketed in the European Union, with the exception of products such as meat, fish and unpasteurized milk. The Ministry of Economy indicates that these reforms may save importers between 7% and 11% of costs.
There remains a big question about whether these savings will reach the end consumer, given that a few major companies control the market. For example, companies such as Tnuva, Strauss, and Asim monopolize a large percentage of the market, giving them significant pricing power.
Obstacles to change
Despite the reforms, a report by the Israeli State Comptroller for 2023 indicates that the market still suffers from significant concentration. In the food sector, the five largest companies control 37.5% of the market share, which is a slight decrease compared to 42.7% in 2017.
However, the Israel Competition Authority has failed to examine certain categories dominated by major importers such as Diploma and Shestowitz, weakening efforts to increase competition.
Here, important questions arise that are answered by the experts interviewed by The Times of Israel:
- Will prices fall? Experts say it is not certain that these reforms will lead to lower prices. Gur points out that “shipping and raw material costs have decreased globally, but this has not been reflected in product prices” in Israel.
- How influential are monopolies? A few large companies control about 80-90% of the market for some products such as coffee, with only two or three companies controlling each category.
It appears that structural obstacles and entrenched monopolies may limit their impact in the near term. With prices continuing to rise in Israel and no clear vision for breaking these monopolies, the reforms may remain just a small step on a long road to reforming the economic system, according to The Times of Israel.
