Israel's 'Basket of Israel' Price Initiative Ends Amid Mixed Results

The "Basket of Israel" initiative, launched by Economy Minister Nir Barkat six months ago, will conclude on October 14. Under the program, the supermarket chain Carrefour committed to maintaining prices on 112 specific products. However, Carrefour will now be released from this obligation, and the state will not invest an additional NIS 25 million to extend the campaign for another six months.

The Ministry of Economy claims the initiative resulted in direct public savings of approximately NIS 40 million, with additional savings in competing chains. However, the full report substantiating these figures has not yet been published, preventing independent verification. Carrefour highlighted increased brand exposure and new customers, but internal reports indicated that while the initiative brought in new shoppers, it negatively impacted revenues and profitability, contributing to the decision not to extend the program.

Independent studies and market analyses conducted during the initiative's run largely failed to find the widespread price war that was anticipated. While Carrefour's participating stores and online platform saw price drops of around 35% on basket items, other categories experienced price increases. Research from Tel Aviv University suggested that across all chains, there was no significant decrease in the prices of basket products, with discount chains showing an average drop of only about 3%. "Makhsaney Hashuk" stood out with a 10% decrease, while other major chains showed minimal or no reduction.

Carrefour stated that the compensation received under the tender was insufficient to cover the costs incurred, including maintaining 85% product availability and additional logistical expenses for stock transfers between its approximately 150 branches. Some market estimates suggest these costs could amount to tens of millions of shekels. Electra Consumer Products, Carrefour's parent company, reported a 2.6% decrease in its food retail sector revenue in the second quarter.

The initiative's ambitious goal was to create competitive pressure across the entire market, but Carrefour was the only bidder for the tender. While the Ministry of Economy attributes the early termination partly to delays caused by the war and supplier availability, making a six-month extension difficult before an expected government change, it is passing the collected data to the next government. A new economy minister might pursue a different plan, though elements of the "Basket of Israel" could form the basis for future initiatives. Carrefour plans to launch its own independent "Carrefour Special Deal" promotion immediately after the program ends.