Price gouging in the time of corona

Israelis are heading to the stores in droves to stock up for Passover and to prepare for the possibility of a complete lockdown. When they get there, they sometimes discover that prices have changed overnight. For example, hand sanitizer that cost 10 shekels yesterday might cost 20 shekels today.

Chicken, eggs, protective masks and many of the other daily necessities of our new normal now cost more, just as our incomes are shrinking. Some brands of hand sanitizer have seen price increases by over 45%, according to the Israel Consumers Council. Even items with no discernible shortages are seeing spikes, such as a baby bath soap whose price rose by 34%.

This price gouging is happening while many Israelis are least able to afford it. Unemployment has crossed the 20% threshold nationally. That means one in five people are looking for work, and hundreds of thousands of families are being forced to cut back as the holiday approaches.

Are these price increases justified by a dramatic shortfall in supply? Is this just part and parcel of the COVID-19 crisis? After all, Israel is an island economy with 99% of its imports by volume coming in by boat. Isn’t it reasonable to assume the coronavirus crisis has disrupted global supply chains, increasing scarcity and raising costs?

Alas (and thankfully), that’s not the case, at least not yet. Passenger planes may be grounded and Amazon shipments frozen, but the cargo planes are continuing to land, and the cargo ships to reach our shores. Most of the items in our supermarkets arrive on boats via the ports of Ashdod and Haifa. Some items have seen shortages, like Barilla pastas from hard-hit Italy, but there is no general shortage.

So why are supermarkets raising prices? Simple: because they can. Though supplies are plentiful, the general anxiety of this moment makes us all afraid that there may be shortages down the road. The supermarkets rightly assume we’re not going to start comparing prices as we rush through the aisles, hands in gloves, to ensure we’ll have food to feed our families. Price gouging during an emergency is illegal in some form in 34 American states, but there is no criminal statute prohibiting it in Israel.

Several days ago, my organization, a crowd-funded nonprofit lobby firm dedicated to promoting the public interest on economic issues, petitioned Economy Minister Eli Cohen to use the authority granted to him by law to order the major supermarket and pharmacy chains to report to him (and thus to us and the public) all the price changes they have instituted since the outbreak of the coronavirus crisis.

Legislation takes time, and every government agency is running low on manpower and budgets at the moment. Instead of launching a campaign in the middle of this crisis to change laws and regulations, we’ve decided to focus on a simple, pragmatic way to restore competition and empower the consumer once more: price reports.

Information is vital to the proper functioning of a market, and making this information accessible, especially in this era of online news and online deliveries, will signal to the major chains, and to the entire business community, that price gouging won’t go unnoticed, that consumers will hold retailers accountable for taking advantage of our fears and anxieties at a time of dire national emergency — not someday after the crisis, but right now.

It will take more than the supermarkets’ reporting to prevent price inflation. The media will have to report on price hikes, and the public will have to make the right choices to punish those trying to take advantage. But the first step, the service we can provide right now to an anxious public, is to make the information available in the first place. Of course, if the price inflation doesn’t stop, we will go the next step. We will propose legislation to allow consumers to file class action lawsuits against those raising prices unnecessarily during a formally declared national emergency.

At Lobby 99, we are committed to ensuring the public’s interest isn’t elbowed out of the room by corporate interests. Our over 6,000 members, who are now facing the challenges of this difficult time like everyone else, are committed to ensuring that no one falls prey to corporate greed while at their most vulnerable.

If you have encountered examples of price gouging or price inflation, please take pictures, record the event and send it to us. A single customer can be intimidated or exploited, but the public as a whole can’t be held hostage. The public, after all, has excellent lobbyists on its side.

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