The cost of living is the biggest concern for Israeli voters stuck in the electoral treadmill

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  • Israeli economy strong but cost of living higher than OECD average
  • Frequent elections complicate cost-cutting efforts
  • Politicians promise a competitive boost

MODIIN, Israel, Oct 13 (Reuters) – Israelis are fed up with soaring prices and the country’s seemingly never-ending elections. High living costs, exacerbated by record inflation, are a top priority for voters in the Nov. 1 election – a fifth in less than four years.

The cost of living even outweighs issues like the conflict with the Palestinians, voter polls show. Yet in a turbulent political system, it is ultimately attitudes toward polarizing former Prime Minister Benjamin Netanyahu that influence voting behavior. Furthermore, a seemingly never-ending election cycle means that far-reaching economic reforms are all but impossible.

The country’s repeated votes have passed only one state budget since 2019, hampering the kind of long-term planning needed to pass cost-cutting reforms. This has fueled voters’ fears that a new election will do little to improve the situation, despite promises of change from Netanyahu’s right-wing religious bloc and his rival, centrist Prime Minister Yair Lapid.

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In the suburb of Modiin, halfway between the affluent, high-tech hub of Tel Aviv and far poorer Jerusalem, Matthew and Ilana Lipman are a picture of middle-class Israel, with a sizable mortgage, four children, and a dog.

Both teachers are in their early 40s and say they are struggling to make ends meet. And record 14-year inflation isn’t helping. “Every time I go to the grocery store, the prices go up,” Ilana said.

“(Our) expenses are higher than income; every month we see it more and more,” said Ilana. “It doesn’t work.”

While grateful for their children’s basic amenities, a roof over their heads and food on the table, they say extras like afternoon classes or a visit to the pool are becoming unaffordable luxuries.

With low unemployment and robust growth rates outpacing most of the West, Israel’s economy is doing well overall, said economist Manuel Trajtenberg, who heads Tel Aviv University’s Institute for National Security Studies. read on read on

But he added: “We have not been able to translate macroeconomic success into an improvement in the cost of living and quality of life for the average Israeli citizen.”

DEAD END

Methods for determining the cost of living vary, but economists largely agree that staple foods such as dairy, eggs, bread, oil and meat are more expensive than they should be compared to other Organization for Economic Co-operation and Development countries (OECD ).

The OECD has 38 member countries in Europe, North and South America and the Asia-Pacific region.

“Apart from communication, in every other category, food, housing and so on, the median Israeli salary is much lower than the average OECD salary,” said economist Dan Ben David of the Shoresh Institute for Socioeconomic Research.

Israeli prices are 40% higher than the eurozone and 17% higher than the United States, according to a study co-authored by former Bank of Israel Governor Karnit Flug of the Israel Democracy Institute (IDI).

Reasons include import monopolies and bureaucracy as well as a protectionist policy for local suppliers.

A separate IDI poll found that the cost of living was a top priority for 44% of Israeli voters, well above those who listed diplomacy and security, which would include the Israeli-Palestinian conflict or Iran.

Nonetheless, economic troubles will not overcome the current deadlock between Netanyahu’s bloc and Lapid, said IDI President Yochanan Plesner. “We are deeply immersed in identity politics and inter-bloc movements are virtually non-existent,” he said.

Reform is essential to sustain long-term growth, Bank of Israel Governor Amir Yaron said, so the lack of continuity in government is detrimental. “That’s the main difficulty that comes from these repeated election cycles,” Yaron told Reuters.

In response to voters’ pocket pains, both political camps are promising comprehensive measures.

Netanyahu boasts of his economic credentials; a free market advocate who is credited with leading reforms he spearheaded as finance minister two decades ago that allowed Israel to weather the 2008 global financial crisis.

But his five consecutive terms as prime minister from 2009 to 2021 saw house prices more than double and despite promises to boost competition and cut taxes, his record on the cost of living has been mixed.

Lapid’s camp highlights measures his government has pushed over the past year to lower food prices, such as agricultural reforms and cutting red tape on food imports. read on read on

The Lipmans have little faith that their voice will make a difference. “No one really cares about us,” Matthew said.

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writing by Maayan Lubell; Edited by James Mackenzie and Alexandra Hudson

Our standards: The Thomson Reuters Trust Principles.

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