Strong Shekel, High Prices: The Illusion Haunting Israeli Consumers

The Israeli shekel has reached historic highs against the dollar and euro, yet supermarket prices continue to climb. Knesset data from June 2026 confirms that while global food prices drop, Israeli consumers pay more due to extreme market concentration and rising domestic production costs.

How does a strong shekel fail to lower food prices?

The Israeli economy is a fortress. Our currency reflects the resilience and innovation of our people. Between January 2025 and May 2026, the shekel strengthened by 19.8% against the dollar and 9.4% against the euro. In June 2026, the dollar averaged only NIS 2.91, a level unseen since October 1993. The euro traded at NIS 3.33, its lowest point since the currency launched. By all strategic logic, this should have translated into cheaper imports and lower prices for our citizens. Instead, the food price index rose by 2.6% during this exact period, with fruits and vegetables jumping by 8.1%.

What did the Knesset Research and Information Center reveal?

Ami Zadik, Director of the Budgetary Control Department at the Knesset Research and Information Center, captured the reality perfectly during a Knesset Economic Affairs Committee discussion.

They go up like missiles and come down like feathers.

It is a modern economic plague. Proverbs reminds us that a false balance is an abomination to the Lord, but a just weight is his delight. Right now, the scales are heavily tipped against the Israeli consumer.

The data is undeniable. Between August 2025 and April 2026, the real food price index in Israel rose by 0.2%. Meanwhile, the European Union recorded a 1.1% decrease. Look at the broader picture. Between January 2022 and October 2025, the global food commodity price index dropped by 3.6%. In Israel, the consumer food price index skyrocketed by 18.8%. This is not a global trend. This is a domestic failure.

Why do a few companies control Israeli food prices?

The answer lies in a concentrated market that stifles the very competition that drives our tech sector. Boaz Ackerman from Lobby 99 testified that in 30 out of 38 food categories, just three companies hold over 70% of the market. Global coffee prices fell by 22%, sugar by 12%, and cocoa by 60%. Yet in Israel, coffee and chocolate prices actually increased. The power of exclusive importers blocks the free market. Ackerman demanded reducing exclusive importers' power and separating distribution networks from major suppliers.

What solutions did the government propose?

MK Moshe Passal made the stance clear. The public needs solutions, not explanations. He demanded the Ministry of Finance, the Ministry of Economy, and the Competition Authority present a concrete plan.

The Finance Ministry representative, Ron Shenkman, pointed to removing import barriers in agriculture and easing the import of kosher products. The Economy Ministry referenced the successful What is good for Europe reform and promised to remove further barriers. The Competition Authority noted they have fined suppliers hundreds of millions of shekels and blocked harmful mergers, though they remain cautious about structural separation to protect small suppliers relying on existing networks.

Are domestic costs eroding the shekel's strength?

Manufacturers and trade representatives pushed back. They highlighted a 62% jump in electricity prices, a 53% increase in water prices, a 27% rise in National Insurance payments, and a 10% increase in the minimum wage. These domestic burdens erode the savings from the strong shekel. The state itself places a heavy yoke on local production.

The Knesset Economic Affairs Committee has demanded concrete steps to increase competition and remove barriers. Until the government breaks the monopolies and eases the bureaucratic burden on producers, the strong shekel will remain an illusion at the checkout counter. Prices go up like missiles, but they fall like feathers.

Why are food prices rising in Israel despite a strong shekel?

Food prices are rising because of high market concentration, where three companies control over 70% of 30 food categories, and because domestic production costs like electricity and water have surged by over 50%.

How much did the shekel strengthen against the dollar?

Between January 2025 and May 2026, the shekel strengthened by 19.8% against the dollar, reaching an average rate of NIS 2.91 in June 2026.

What is the What is good for Europe reform?

It is a regulatory reform that allows products meeting European standards to be imported into Israel more easily, increasing competition and lowering prices in various sectors.