Almost half of the Israeli public believe that government policies are to blame for the recent series of price hikes, a poll published by the Ifat Group, a leading Israeli company in business information, revealed on Sunday.
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Citing global cost hikes and overhead losses, a series of major companies have announced price increases on their products in recent weeks, affecting goods that can be found in nearly every home. They include detergent giant Sano, Osem-Nestle, Leiman Schlissl, the Strauss Group, Diplomat Group, Ristretto, and Shestowitz.
Compounded by a recent hike to electricity and gas prices, the move sparked a public uproar.
Calling the move "callous" and "cynical," Finance Minister Avigdor Lieberman and Economic Minister Orna Barbivay warned consumer goods producers that the government would not allow them to squeeze the public when Israelis are reeling from the global pandemic.
The pressure, enhanced by budding consumer boycotts worked, and Osem, Leiman-Schlissl Diplomat, and Shestowitz announced they would be deferring the planned price hike at least until after the Passover holiday, in May.
The survey, conducted among 500 respondents representing all sectors in Israeli society, found that 46% of the public believe the government is responsible for rising consumer goods prices, while only 16% blamed the food producers and 11% named food importers.
Another 11% said it was the supermarket chains that were driving prices up, 5% blamed the consumers, 5% named other factors, and 6% of respondents were undecided.
A segmentation of the data suggested that Israelis ages 18-50 were more likely to blame the government, while only 33% held industry actors responsible. Among Israelis 51 and over, some 30% held the government responsible for the price hike, while 54% said it was the business sector's doing.
Meanwhile, the International Monetary Fund called on the Bank of Israel to raise interest rates and taper foreign exchange intervention if inflation pressures intensify further.
In a statement following its annual visit, the IMF said there was room for Israel's government to raise taxes while also advising more efficiency in state spending.
Israel's inflation rate was 2.8% in 2021, within an official 1-3% target and well below rates seen in many Western peers, but the IMF said rising services prices, a high rate of capacity utilization, and wage gains in some sectors "show incipient signs of underlying inflationary pressures".
"If underlying upward pressures become more salient, the Bank of Israel should be ready to tighten monetary policy," the IMF said.
Iva Krasteva Petrova, IMF mission chief for Israel, told reporters that since inflation is within target there is no need for monetary tightening now but that the central bank should remain vigilant. She also expressed concern over high housing prices.
At the same time, the IMF said "foreign exchange purchases should taper off, allowing the shekel to be determined by market forces, without precluding future purchases should (shekel) appreciation pressures threaten to move inflation or inflation expectations below the target band".
The central bank has said it is not worried about an inflation outbreak, and that allows it patience in conducting monetary policy.
The IMF praised the government's management of the COVID-19 pandemic and its aim of lowering Israel's debt burden over the medium term.
But it warned the planned consolidation relies on spending reductions that may prove challenging given already low civil spending. "Conducting a review of public spending efficiency would be useful," it said
The government has scope to increase tax revenues, the IMF said, adding: "The tax system could be made more progressive and the tax base could be broadened, including by reducing pension tax exemptions and personal and corporate tax incentives for selected groups."
After 6.5% growth in 2021, the IMF expects solid economic growth in Israel in 2022, supported by consumer spending, investment and exports.
It said that new COVID variants could be a threat to economic growth while tightening of global financial conditions could jolt stock markets, lower government revenue, and raise the cost of capital.
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