The Consumer Council has recently examined the cost to consumers of the removal of price control over cottage cheese. The investigation shows that the price of cottage cheese rose by between 30% and 40%, while the prices for products that remained under price control rose by only 10%. This means that the public has funded, from its own pocket, an increased cost for cottage cheese totaling 760 million NIS for the period 2008-2011.
The Consumer Council has called for the immediate resumption of price control on those dairy products from which it had been removed, and for the establishment of a basket of “anchor” products under price control, which would create an anchoring effect that will bring down the prices of products that are not in the basket, thus benefiting the general public, and protecting disadvantaged population sectors.
The establishment of a basket of “anchor products,” to include basic items from various categories whose prices would be subject to government control, would allow consumers to purchase products at a reasonable price, while also limiting price increases for other products in the same categories. This is because consumers would always have the option of choosing the cheaper, price-controlled item. Central Bureau of Statistics data shows that the price of cottage cheese rose from 5.06 NIS (on January 1, 2007) to 7 NIS (on January 1, 2011).
The State Comptroller’s report (in 2012) states that “the Price Control Unit and the Prices Committee do not take the consumer population into consideration. Consumer complaints over apparently unjustified prices, for food products not subject to price control, are not collated or recorded in any database, and are not taken into account in the decision making process for the imposition of price control; the Prices Committee does not determine the attitudes of consumers, who are the principal group affected by price control on food products, and do not take into account – in their decision process – the influence of changes in price, the imposition or removal of price control, or changes in the level of control on the welfare of consumers.”
Adv. Ehud Peleg, Consumer Council CEO: “The Consumer Council demands the immediate implementation of a number of steps that will bring down prices in the short term, at least until the time that steps planned for the long term have an influence on shelf prices. Unfortunate decisions, taken through improper means, have led to a dramatic rise in the prices of products removed from price control. If these immediate steps are not taken, as the Consumer Council demands, and if the State Comptroller’s report is not adopted, then the public will continue to pay out millions of shekels from its own pocket.”
According to the outline proposed by the Council, the basket of price-controlled anchor products would include one product from each basic food category, in those industries in which there is no true competition, in order to ensure that a reasonably-priced basic food basket would be accessible to the general public, with emphasis on weaker population sectors. This would create an “anchoring effect” that would restrict price increases for products in those same categories which are not included in the basket.
Similarly, the Consumer Council calls for formalizing, as part of the Price Control Law, the principles and considerations that underlie the imposition or removal of price control, and the inclusion of a representative of the Consumer Council on the Prices Committee, so that the Council can verify that the consumer welfare standpoint has been taken into account.