The next alibi for the cost of living is here: Is 'heatflation' coming to Israel?
Heatwaves and drought in Europe are raising concerns about food prices, but the strengthening shekel and falling raw material costs suggest otherwise. Before climate becomes an excuse for another price hike, it is worth examining what actually impacts the Israeli consumer basket.
Europe is facing an extreme summer of heat, drought, and wildfires, leading to concerns about renewed pressure on food prices. However, before headlines from abroad become another excuse for price hikes in Israel, it is worth pausing to analyze what truly affects the local consumer basket. The shekel has strengthened, prices of certain raw materials have fallen from their peaks, yet we have seen almost no significant price reductions on shelves.
Why is the road from lower costs to the shelf so long, while any minor disruption in Europe immediately triggers talk of a "price update"?
How do 40-degree heatwaves in Europe enter the Israeli basket?
Although an Israeli supermarket may be located in Petah Tikva or Haifa, its supply chain begins thousands of kilometers away. Coffee, cocoa, grains, and sugar pass through a complex international market. Not every stock exchange fluctuation should immediately impact the shelf. Manufacturers often buy raw materials in advance, utilize annual contracts, and hedge currency risks. Raw material costs are only part of the final price, which also includes packaging, wages, logistics, and marketing.
The problem is that this complexity is highlighted primarily when prices are expected to go down.
The Israeli pricing paradox
In recent years, we have become accustomed to arguments about rising global costs, the dollar exchange rate, and shortages. However, the situation has shifted. The shekel has strengthened significantly against the dollar; according to Reuters, it rose by about 30% by mid-2026 compared to April 2025. For an importer, this is a significant factor. Furthermore, the cocoa market has seen sharp declines after its peaks, and analysts predict a potential drop in coffee prices due to improved yields in Brazil.
Where are the price cuts? We rarely hear importers say: "The currency has strengthened, so we are lowering prices." Yet, any fire in Spain or low water level in the Rhine immediately prompts a "new pricing strategy," which almost always points upward.
Weather should not become an alibi
Climate is changing, and extreme weather will inevitably become part of the economy. But a fire in Europe is not an automatic permit to raise prices in Israel. Consumers do not buy coffee futures or barrels of oil; they buy finished products. When told that the world has become more expensive, it is entirely legitimate to ask what happened when the world became cheaper.
Perhaps this is the greatest paradox of the Israeli cost of living: bad news reaches the shelf quickly, while good news seems to take a much longer road.
