Israel Rises to Second Most Expensive Country in Big Mac Index Amid High Living Costs

Israel has surged from eighth to second place globally in The Economist's Big Mac Index, which measures food cost through the price of a Big Mac hamburger. Economic analyst Riki Maman, speaking to Channel 7, explained that while the index is not entirely scientific, it reflects a real trend of high living costs in Israel. She noted that the strengthening of the shekel in the past year influenced Israel's ranking but does not fully explain the high prices. Maman emphasized that broader, more rigorous indices also place Israel among the most expensive countries in the OECD.

Maman highlighted that the Big Mac price reflects more than just raw ingredients; it includes labor costs, municipal taxes, regulation, business licensing, and interactions with multiple government bodies. She identified regulation and limited competition as the main drivers of Israel's high living costs. While acknowledging the necessity of safety and health regulations, she criticized the complexity and multiplicity of regulatory bodies, which increase business expenses and ultimately consumer prices.

Recently, the Ministry of Health eased regulations on restaurants and food businesses, a move expected to reduce costs. Maman also called for increased competition through more local producers and expanded imports of raw materials and products. She pointed out that sectors like textiles, furniture, and electronics saw price drops after market openings, but agriculture and food remain heavily protected, leading to market concentration and limited competition.

Political resistance and lobbying by agricultural organizations often block reforms in agriculture. Maman suggested balancing market opening with direct support for farmers, focusing on crops where Israel has a comparative advantage and expanding exports. She warned that planned markets can cause shortages of basic products like dairy and eggs, which competitive markets resolve quickly by increasing supply.