Cost of living in Israel, Palestinian territories continues to climb

Abu Zakaria, a father of eight living in the West Bank, is browsing at a fresh chicken display in Ramallah’s main market, comparing prices.

The restaurant worker told The Media Line that he is unable to provide the most basic needs for his family on a regular basis. “There has been an exorbitant price hike, and it has become difficult to provide for my family,” he said. “A kilogram of chicken is more than 20 shekels ($5.70), what should I do?” The price for a kilogram of fresh chicken, for example, which is a staple on Palestinian tables during the Muslim holy month of Ramadan jumped at least 50% compared to last year. Abu Zakaria lives on less than $600 a month; he says he is struggling to keep up with price increases.

“My salary only lasts for less than two weeks,” he said.

Meats, fruits and vegetables are slightly cheaper at this Ramallah market, but despite this, many Palestinians are complaining of high prices, saying that they can’t afford to buy many items.

The cost of food in the Palestinian territories of the West Bank increased 5.39% in February 2023 over the same month in the previous year, according to the Palestinian Central Bureau of Statistics.

Price hikes are affecting all aspects of people’s lives and the cost of daily necessities from rice and flour to dairy products and cooking oil.

While the Palestinian Authority government insists this wave of price increases is temporary because of Ramadan and the resultant increased demands, PA Minister of National Economy Khaled Osaily says he is instituting measures to reduce the cost of basic commodities during the holy month. But some observers are skeptical, and warnof more protests.

“There is chaos in the Palestinian markets. Some of the commodities have unjustified hikes. It is caused by the greed of wholesalers, the absence of competition and lack of discipline in the markets, and the absence of the role of the Ministry of Economy,” according to Dr. Nasr Abdel-Karim, a professor of financial and economic sciences in theCollege of Graduate Studies at the Arab American University in Ramallah. “This year is witnessing an unprecedented rise in chicken prices, and it is still rising. We sell a kilogram for 18 shekels, but it costs us more than that,” Ibrahim Tlaib, a butcher, told The Media Line.

Merchants complain that business is down, and that people are reluctant to spend money. “Customers who used to buy five chickens now buy two. And those who used to buy two now buy one. And there are those who stop buying,” Tlaib said. “Income and wages do not rise and are not linked to the cost of living. Therefore, a citizen whose wages are fixed becomes unable to adapt,” said Abdel-Karim. Many people are struggling to make ends meet, and observers say the rapid increase in the cost of living will push the most vulnerable households further into poverty and weaken their ability to access sufficient food. The PA has many constraints on its economy, including the war in Ukraine and a sharp decline in funding from international donors; in addition, the withholding of vital tax funds by Israel from the PA means government employees’ salaries are not paid on time, nor in full.

These tax funds account for 70% of the PA’s revenue.

The issue of price hikes and an increase in the cost of living is not exclusive to the Palestinians; Israelis too are struggling with a steep rise in many commodities. In the popular Mahane Yehuda market in Jerusalem, buyers and sellers are watching prices closely.

 'Unprecedented' times 

Tal Calderon, a baker for the last 35 years, says he has not seen anything like it. “All the prices are up 100% – sesame, flour, chocolate, everything,” he said.

Calderon has worked for over 35 years at his family’s bakery; he told The Media Line that these are “unprecedented” times.

“I hear people complain about the prices every day, I’ve never seen anything like it,” he said. Israel’s inflation rate stood at 5.3% at the end of 2022, after a 2.8% increase recorded a year earlier, its highest level since 2008. The consumer price index rose by 0.3% in December 2022, led by gains in housing, food and transportation prices, according to Israel’s Central Bureau of Statistics (CBS).

The cost of food in Israel increased by 3.88% in February compared to the same month in 2022, according to the CBS. Eyal Winter, professor of Economics at the Hebrew University in Jerusalem, told TheMedia Line that there are two main forces behind the rise in the cost of living. "The rise in the cost of living is primarily happening because of the flourishing high-tech industry in Israel and a very high foreign investment that raises the demand for the shekel," he explained.

Shmuel, a butcher at the market in Jerusalem, told The Media Line that since the COVID- 19 pandemic, and then the start of the war in Ukraine, prices increased by “70%, 50%, and you have some items at 100%.”

“Many people say why do you go up … it was fifteen, now it’s eighteen. What can we do?” Shmuel said, repeating some of what he hears from his customers. As a result, many people are changing their buying habits.

“We try to buy at cheaper places that we know. Like supermarkets in more religious communities. Supermarkets there usually have cheaper items,” Sela, a young student, told The Media Line.