The cost of living in the State of Israel has led to changes in consumption habits of many consumers who had to adapt themselves to the new economic reality.
Last month, the Central Bureau of Statistics has released the national accounting data for the first quarter of 2014. These data have indicated a decrease of 2% in the annual rate of private consumption in Israel. Following these data, the Israeli Consumer Council has commissioned a survey conducted by the "Geo-Cartographia" Research Institute, with a representative sample of 500 respondents, men and women, aged 18 and above. The survey was designed to examine the impact of the cost of living on consumption habits. The survey was conducted during the first week of June 2014.
The public has reduced consumption because of high prices
The survey revealed that almost 70% of the Israeli public agree to some extent to the fact that high prices have led them to consume less (52% agree or strongly agree; 17% agree to a moderate degree).
The impact of price level on households' consumption is found across the whole Israeli public. Men and women, young and old people, secular and orthodox, as well as residents of the periphery or people living in the center. Consumption reduction in response to price level is more prominent among households with low income: 84% agree to some extent that reduction of their consumption volume is due to high prices of the products.
More and more women are buying cheap brands
In the last few years, generic products and brands, which are cheaper that famous ones, have proliferated in the commercial chains. 41% of the Israeli public have turned to cheaper brands in the past six months. Half of them buy the cheapest brand in each purchase, while others have made the change for only certain products.
The transition to cheaper brands is more pronounced among women (45%) compared to 36% among men, while among those who earn less than average income, 56% have turned to cheaper brands.
The main reason to this trend is the need to save money (58%). Other reasons the respondents mentioned were that cheaper product is good enough (45%) and that households have less money available (26%).
Protesting through the wallet
In addition to economic reasons explaining the fact that consumers turn to cheaper brands, 23% of consumers turn to such brands in protest against high prices. That is, nearly a quarter of Israelis are trying - through their wallet and their consumption – to lower the prices level.
Among people with low income, it appears that the transition to cheaper brands results from a necessity. 40% of people who buy cheaper brands do so because of a decrease in the money they have available. In contrast, among those with higher income and among seculars, ideology constitutes a significant element: almost 30% of people with high income and the same rate of seculars choose to buy cheaper brands in order to protest against high prices.
Less health in the food basket
In the previous survey the Council had commissioned and that was carried out in December 2013, 46% of the consumers had testified that they will reduce consumption of fruits and vegetables if their price increase in 20%, while an increase of 50% will result in a diminution of 67% of the amount of basic vegetables they buy and 72% (!) will reduce the amount of basic fruits they buy.
Israel Consumer Council CEO, Mr. Ehud Peleg, says that the cost of living is acting like a boomerang to businesses who have exaggerated in raising their prices, while the consumer is showing today more self-discipline and judgment in his shopping decisions. Reduction in level of purchase is a response arising from distress, but it is also a badge of honor to the Israeli consumer, who knows how to control his shopping urge and applies the national feature – HaDavkah – "on purpose" - towards those who consider him as a "Frayer' ("sucker") and continue to take advantage of him.