Israel Scraps 'Basket of the Nation' Inflation Initiative Amidst Criticism

Israel's Ministry of Economy has officially ended the "Basket of the Nation" initiative, a program designed to combat the rising cost of living by offering a fixed set of around 100 essential products at significantly reduced prices. The project, which was initially slated to run for a full year, was abruptly terminated after its first six months. The official reason given was the inability to impose such a financial commitment on the incoming government following upcoming elections, a justification widely criticized as weak.

The initiative, spearheaded by the Ministry of Economy and implemented by the supermarket chain Carrefour, aimed to force competitors to lower prices by offering a basket of goods for approximately 1,098 shekels, compared to an average market price of around 1,700 shekels. The government allocated about 25 million shekels for the initial six-month advertising campaign. Early research from Tel Aviv University indicated that prices for the basket items at participating Carrefour branches and online did indeed drop by about 35%.

However, the program's broader goal of stimulating competition and forcing other major supermarket chains to follow suit largely failed. Discount chains saw only minor price reductions, and some, like Shufersal Deal and Osher Ad, showed no significant decrease. Carrefour itself reported that while the initiative brought in new customers, it negatively impacted its revenues and profitability, leading to its decision to exit the program early.

Sources within the food market suggest that Carrefour's losses stemmed from several factors, including the depth of the discount (30%), which required an unmanageable volume of customers and strained supplier capacity. Suppliers reportedly lacked incentives to meet the high demand, partly due to a lack of involvement in the campaign's planning. Furthermore, the program's limited availability in only 54 out of Carrefour's 144 branches led to customer frustration and a feeling of being misled, damaging Carrefour's brand image.

Carrefour's new CEO, Inbal Harson, is now tasked with rehabilitating the chain's image and financial standing. One of her initial moves will be to launch an independent promotion across all of Carrefour's branches and online platforms. The "Basket of the Nation" ultimately benefited only a small segment of consumers and appears to have been a costly endeavor for Carrefour, raising questions about the program's planning and execution.