Religious Articles and Their Cost (Pricing Realities)

24 Nissan 5771
April 28, 2011

price-increaseI have been asked why the cost of religious articles has suddenly jumped up in price.
Let us seek to understand the consumer realities by analyzing market realities today.

A Talis and Talis Katan are made from wool or cotton, which has risen by 12% to 25% on the wholesale level, which will reach the consumer as soon as old stocks are sold off.

cottonThe major cause of the price increases is due to the increased cost of the materials themselves. The costs of wool and cotton have increased within the last year by 12% to 25%. The cost is now being passed onto the consumer. The consumer can and should expect an increase of NIS 3 to 10 on a talis katan depending on the size and material and a NIS 20 to 50 on a talis depending on the size and the style. The new prices should be seen shortly after Pesach.

Articles of STaM
The world of STaM has always been linked to the US dollar. The dollar for years has been the world standard and the most stable and strongest currency. Over that last few years however the US dollar has lost creditability as the most stable and strongest currency. With this new reality, the NIS (New Israeli Shekel) has gained strength against the dollar. Not so long ago, a sofer earning $ 2000 a month was earning as much as NIS 8800. As the dollar lost ground against the NIS that dropped down back to 8000 then below 7000. Many sofrim stopped writing as they could no longer earn enough to pay their expenses.

The STaM industry being caught in the international dollar crunch began seek methods of stabilization to counter the crash of the dollar.

One way which the industries of STaM chose to deal with this financial crisis was to freeze the dollar rate for the most part of NIS 4/$ 1. There for a mezuzah parchment costing the sofer $5 would now cost 20 NIS. The quoted dollars was always recalculated by 4 NIS to $ 1, oblivious to the true rate of exchange with payment only via NIS or in dollars as recalculated back to dollars ( $100 x 4.0 = 400 converted back NIS 400/ 3.4 = $118). The STaM industry is slowly converting from a US dollar base to the NIS. Many sofrim set a price in NIS for their work. The same applies in many cases to the cost of “STaM parts such as batim, reztuos, giddin and klaf.

The result is that purchasing power of the US dollar has declined with the strength of the NIS. The $500 set of tefillin of a couple of years back when the NIS price of the time of 2000 NIS has gone up in dollar terms. That NIS 2000 set today will cost about $589 because of the exchange rate. 

The consumer needs to reorient from a dollar mentality to an NIS reality. In order to purchase articles of the same level as in the past, one using dollars will have to spend more. On average the cost reflects the devaluation of the USA dollar against the NIS – in real terms figure that you are paying about 20% more in general in dollar terms.

When it comes to articles of STaM for the consumer paying in foreign currencies such as dollars or sterling he will be paying more.    

A few side notes:
Payment in foreign credit cards:
Individuals paying for articles in Israel are normally billed in NIS. This is the case even if they are quoted in USA dollars. In general most businesses use the conversion rate of the “dollar purchase rate” based on the Israeli postal bank (the high rate). One should ask which rate is being used. Most non-Israeli credit cards will have a foreign currency surcharge. This charge can range from 1% to 5 % additional to whatever the store will charge. 

One will also find that many stores do not accept Amex or Dinners Club credit cards as the stores are charged a greater commission as compared with MasterCard or Visa.

One should be careful of question of “Rebit” (interest) when using ones credit card in Israel.

 To contact Rabbi Moshe Flumenbaum directly, one may email moshe@hasofer.com.

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