Study Finds Israel's 'Basket Program' Cuts Prices on Selected Goods but Raises Others

A recent study by Tel Aviv University evaluated the economic impact of Israel's "Basket Program," launched by Economy Minister Nir Barkat, two months after its implementation. The program aimed to reduce the cost of living by offering a fixed basket of 100 products at a total price of 1,098 shekels, down from an average of 1,700 shekels before the initiative. The program was implemented in 50 Carrefour stores and online, supported by a 50 million shekel public advertising campaign.

The research, conducted by Prof. Itay Atar, Adi Omer, and Dr. Or Avishi-Rizhi, analyzed daily price data from over 2,000 stores across approximately 70 supermarket chains. It found that while prices of the designated basket products dropped by about 35% in participating Carrefour stores, prices of many other products sold at Carrefour increased. Specifically, price hikes were observed in 46 out of 76 product categories examined, with statistically significant increases in 23 categories.

Outside Carrefour, the program's influence was limited. Physical stores of other supermarket chains showed only minor price reductions averaging 3%, with discount chains like Machsanei Hashuk leading with a 10% drop. Online, price reductions among competitors averaged just 2.3%, with notable exceptions such as Rami Levy Online reducing basket product prices by 9%. Major online retailers like Shufersal and Machsanei Hashuk showed no significant price decreases.

The researchers concluded that although the program successfully lowered prices for the selected basket products, its overall effect on the cost of living was limited and potentially offset by price increases in other product categories. This raises concerns about the net benefit to consumers and the broader impact on market competition.

Summary: A Tel Aviv University study found that Israel's "Basket Program" significantly lowered prices on selected products at Carrefour but caused price increases in many other items, with limited competitive impact on other supermarket chains.

Points: - The "Basket Program" cut prices of 100 products by about 35% in Carrefour stores. - Prices rose in 46 other product categories at Carrefour, offsetting some savings. - The program's effect on competitor supermarkets was minimal, with only slight price drops. - Online competitors showed an average 2.3% price reduction, with some exceptions. - The initiative was backed by a 50 million shekel public advertising budget. - Researchers warn the program's overall impact on cost of living may be limited or negative.

Topic: economy

Entities: {"people":["Nir Barkat","Itay Atar","Adi Omer","Or Avishi-Rizhi"],"organizations":["Tel Aviv University","Carrefour","Pricez","Machsanei Hashuk","Shufersal","Rami Levy"],"places":["Israel","Barcelona"]}