First, given that the inflation rate has remained stable at an extremely low level for the past few decades, I believe firms have become increasingly afraid to raise prices because consumers are not accustomed to price hikes, or because firms anticipate a negative reaction to price rises from those consumers.
Meir Sokoler: The time has come for a new Bank of Israel law Lecture by Dr Meir Sokoler, Acting Governor of the Bank of Israel, at the scholarships award ceremony at the Technion, Haifa, 17 March 2005.