Soaring housing costs and steep food prices are the main drivers behind Israel’s high cost of living, which has overtaken even some of the wealthiest countries in Europe, according to a study by Reichman University’s Aaron Institute for Economic Policy.

“The cost of living in Israel is very expensive, and when you add the security situation and almost three years of war, it is not surprising that we are starting to see signs of emigration of quality human capital – meaning that more Israelis are leaving the country than are coming back,” Dr. Sarit Menahem-Carmi, a senior researcher at the Aaron Institute for Economic Policy at Reichman University told The Times of Israel. “If nothing changes and affordability continues to decline, this is a catalyst for emigration.”

The study, led by Menahem-Carmi, found that the cost of living in Israel has surged over the past two decades and has become more expensive even when compared with some of the wealthiest countries in Europe – Austria, Finland, Denmark, the Netherlands, and Sweden – where GDP per capita is higher.

The research showed that the average household consumption basket (including food, housing, electricity, health, and education) in Israel is 21 percent more expensive than in the richest countries in Europe. In comparison to countries where GDP per capita is lower – Greece, Cyprus, Italy, and Spain – the cost of living in Israel, as measured by the average consumption basket, was found to be 68% more expensive.

The study is based on data from the Central Bureau of Statistics and the Organization for Economic Co-operation and Development.

A comparison of the cost of living in developed countries by the OECD lists Israel as the fourth most expensive place to live. The burgeoning cost of living has long been a flashpoint, culminating in massive protests in 2011 that saw hundreds of thousands camp out in city streets throughout the country, demanding that the government take action to make........

© The Times of Israel