Food Prices Set to Rise as Flour and Egg Costs Jump

Prices for flour and eggs are scheduled to increase by up to 14% next week, impacting the immediate cost of bread and eggs in stores. This rise is expected to trigger a broader wave of price hikes across the food market, as flour and eggs are key ingredients for many food industry products. The surge in wheat prices, which is driving up flour costs, has also affected other grains used in animal feed, a major factor in the pricing of dairy, chicken, and eggs. This could lead to widespread price increases in essential food categories.

The timing of these price hikes, shortly after the elections, may allow producers to leverage the public and incoming Knesset's focus on government formation to implement changes. Manufacturers are also contending with anticipated increases in fuel prices once the excise tax subsidy expires in about a week, higher municipal property taxes (arnona), and increased labor costs due to the hiring of foreign workers. This follows a similar pattern of price increases after the 2022 elections.

However, some may hesitate to take aggressive pricing actions due to election campaign promises from "change parties" regarding the dismantling of monopolies and addressing food prices in Israel. They might opt for a more cautious approach, awaiting the new government's stance.

Regulated egg prices will rise by 2.1% on November 1st, adding 27-33 agorot per dozen, depending on size. A dozen large eggs will cost NIS 14.54, and a dozen medium eggs will cost NIS 13.4. This increase follows a 1% rise last year and a 16% jump in 2023. The outgoing government's cancellation of a reform in the poultry sector, which aimed for gradual removal of market quotas and government planning by June 2032, contributed to this hike. The Ministry of Agriculture cited increased production and marketing costs, including feed, labor, energy, and packaging, as reasons for the egg price increase.

The flour price increase of 11% to 14% in early November is attributed to a sharp rise in global wheat prices, largely due to the closure of Black Sea ports for wheat shipments amid the escalating Russia-Ukraine war. This has forced importers to source wheat from Western Europe at significantly higher prices, increasing raw material, shipping, and labor costs. This will affect prices of bread, pastries, pasta, and other flour-based products. Flour suppliers Bar and Mofot Galim have notified customers of the upcoming price hikes, with Shtibel expected to follow suit. Bakeries are likely to raise prices for unregulated bread and pastries and may request the Ministry of Economy's price supervisor to adjust the regulated bread price, though the ministry's action, especially with a new government forming, remains uncertain. Regulated bread prices have not been updated in four years, with the last increase being 36% for white bread.