Study Finds Israel’s 'Basket of Israel' Lowers Some Prices but Raises Others, Undermining Savings
A Tel Aviv University study shows Israel’s "Basket of Israel" program significantly lowered prices on selected products at Carrefour but caused price hikes in many other items, potentially negating consumer savings. The program’s impact on competitors was limited and pricing strategies appear national rather than local.
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- The 'Basket of Israel' cut prices on 100 Carrefour products by about 35% in participating stores.
- Non-participating Carrefour stores saw a 6% price drop, showing some spillover effect.
- Other major supermarket chains showed modest price reductions of 3-10% on basket products.
- Prices rose in 46 of 76 other product categories at Carrefour, with 23 increases statistically significant.
- Popular non-basket items increased by 1.5% in stores and 2% online at Carrefour.
- No local price competition effect was found; pricing is set nationally by chains.
Two months after the launch of Israel’s flagship "Basket of Israel" program by the Ministry of Economy, a pioneering study by Tel Aviv University's Coller School of Management reveals mixed results. The program, implemented in 50 Carrefour stores and online, promised a basket of 100 products for 1,098 shekels, down from an average 1,700 shekels before the initiative. Carrefour received a 50 million shekel budget for a wide advertising campaign.
The study, conducted by Prof. Itay Atar and Adi Omer from Tel Aviv University and Dr. Or Avishi-Rizi from Pompeu Fabra University in Barcelona, analyzed daily price data from about 70 supermarket chains and over 2,000 branches across Israel during the first seven weeks of the program. It found that prices for basket products in participating Carrefour stores dropped by approximately 35%, with a 37% decrease online. Non-participating Carrefour stores saw a smaller 6% drop, indicating some spillover effect.
Outside Carrefour, the impact was limited. Large discount chains showed modest price reductions: Machsanei HaShuk lowered prices by 10%, Half Hahinam by 5%, Yohananof by 4%, Victory and Rami Levy by 3% each. Shufersal Deal, Super-Pharm, and Osher Ad did not show significant price changes.
However, the study’s most notable finding is that while basket product prices fell, prices for many other products rose. Among 76 product categories examined at Carrefour stores participating in the program, 46 categories experienced price increases, with 23 statistically significant. Popular non-basket items also rose by about 1.5% in physical stores and 2% online. The researchers found no significant price differences in competing chains based on whether a Carrefour store with the program operated in the same city, suggesting nationwide pricing strategies rather than local competition.
Prof. Atar summarized, "The program succeeded in lowering basket product prices at Carrefour and slightly influenced competitors, but economics has no free lunches. Price increases in other categories mean consumers may pay more overall despite savings on basket items. The true test is the total shopping bill, which may have increased rather than decreased."
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