Economic indices paint gloomy future for Palestine

The latest economic reports from the Palestinian Central Bureau of Statistics indicate a rise of prices, which may lead to inflation.

al-monitor A Palestinian money changer displays money at a market in Ramallah, West Bank, March 25, 2015. Photo by REUTERS/Mohamad Torokman.

Topics covered

palestinian society, income, statistics, inflation, palestinian economy

May 23, 2017

The Palestinian Central Bureau of Statistics (PCBS) indicated in a May 14 press release that during April 2017, the Palestinian consumer price index (CPI) "increased by 0.86% compared with April 2016.”

The PCBS noted that the overall wholesale price index (WPI) in Palestine registered a 0.39% rise during the first quarter of 2017 compared to the fourth quarter of 2016. WPI for local products increased by 1.35% compared with the fourth quarter 2016, while agricultural commodities increased by 2.58%, vegetables and dried fruits increased by 5.91% and animal products increased by 4.39% .

It should be noted that 2016 witnessed a 2.67% rise in WPI for local products compared to 2015. Also in 2014, the price index rose by 0.84% ​​compared to the previous year. Concerns have grown that the Palestinian economy will see a record rise in commodity prices even as Palestinian wages remain low.

Maher Tabbaa, the director of public relations and media at the Gaza Chamber of Commerce and Industry, told Al-Monitor, “The rise in WPI and CPI in Palestine is dangerous to the Palestinian economy, as these indices have significantly inflated in recent years, which would worsen the financial burden borne by citizens. The inflation index is registering a record rise for the basket of consumer goods, on which citizens spend more than 86.9% of their monthly wages.”

He added, “The prices of semi-finished goods and raw material prices have increased significantly, which threatens the country with an economic disaster that will harm the private sector and probably push it to seek investment alternatives abroad if the situation continues as it is without the government intervening to raise the minimum wage to meet current inflation rates.”

On March 1, Palestinian Minister of Labor Mamoun Abu Shahla set the minimum wage in all Palestinian provinces at 1,450 shekels (about $400). For comparison, in 2011, the poverty line in Palestine was set at 2,293 shekels (about $637) per month for a family of two adults and three children. “Deep poverty” is defined as a monthly income of 1,832 shekels ($509) or less per month, which is still higher than the minimum wage.

The minister's move to provide a minimum wage is an implementation of Decision No. 11 of 2012. The five-year delay is blamed on the blockade on the Gaza Strip.

A PCBS survey issued Feb. 16 showed that 35.6% of workers in the private sector received less than the minimum wage in Palestine. The survey results read, “In the West Bank about 17.4% of wage employees in the private sector received less than minimum monthly wage, about 38,600 wage employees with average monthly wage 1,068 [shekels, or $298]. In Gaza Strip the percentage of wage employees in the private sector who received less than the minimum monthly wage was 69.2% about 83,500 wage employees with average monthly wage of 748 shekels [$209].”

Sami al-Amasi, the head of the Palestinian General Federation of Trade Unions, told Al-Monitor, “The CPI and WPI surge in the Palestinian markets greatly affected the purchasing power of citizens, especially in the Gaza Strip, as more than a third of Palestinian workers receive less than the minimum wage in Palestine. Palestinians are forced to take out loans from local banks to bridge the gap between their wage and the soaring prices of goods.”

The head of the Palestinian Society for Consumer Protection, Azmi al-Shiokhi, told Al-Monitor that the price hike in the Palestinian markets stems from the lack of regulatory laws, such as competition and antitrust laws. “This allowed monopolistic companies to illegally control prices of goods,” he said.

He added that the cost of living monthly allowance disbursed by the Palestinian Authority, equivalent to 30 shekels ($8) per employee, is only about 0.1% of a minimum-wage salary.

“This is much lower than the rate of inflation, an average of not less than 3% annually. This is a financial burden on Palestinian families,” he explained.

A Jan. 8 report by the Palestinian Center for Human Rights showed that the poverty rate in the Gaza Strip exceeds 64% and that 80% of the population of Gaza is dependent on foreign aid.

Gaza's former Economy Minister Alaa Al-Deen Al-Rafati told Al-Monitor that the Palestinian economy suffers from high inflation rates due to Israeli measures and Israel’s illegal control over Palestinian capacities and resources.

“This is due to Israeli arbitrary measures, its blockade imposed on the Gaza Strip, its control of commercial activity and its closure of crossings for more than 10 years,” he said.

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