Rising prices in Israel had a significant impact on household spending last year, especially on groceries and utilities, according to a new study from the Histadrut Consumer Authority and the Geocartography Knowledge Group. More than four in 10 survey participants reported that their economic situation had gotten worse since the start of the war, and that reality is leading many Israelis to reduce their spending. One in three Israelis said that their spending on medical care had gone up, and one in six Israelis reported forgoing medicine or other medical treatment because of the rising prices.
More than 500 adult participants representative of the Israeli population took part in the study. Their answers suggest that the rising cost of living is affecting all areas of life: 82% of respondents said they were spending more on food, 65% said they were spending more on utilities, and 60% said they were spending more on their vehicle.
“The complicated security and economic reality that we’ve all been dealing with over the past year has pushed many families to a point where they need to cut back in order to finish the month in the clear, even families with two partners who both work,” Yaron Levinson, CEO of the Histadrut Consumer Authority, said. “That effort to reduce spending was also expressed in the survey findings.”
According to the survey, more than one third of respondents had to reduce spending on culture, trips, and recreation. One third also reported reduced spending on furniture and household goods, and one fourth reduced spending on clothing.
The rising cost of living is also taking its toll on Israelis’ ability to celebrate the various autumn holidays. Nearly 50% of the Israelis who reported a worsened financial situation said that they would spend less on groceries for the holidays, and 87% said that shopping for the holidays this year is more expensive than it’s been in past years. Israelis are more likely to compare prices between supermarket chains, with 65% doing so this year, up from 55% last year. More than 47% of the respondents said they plan to split their holiday shopping between multiple grocery stores in order to save money.
“We’re witnessing an encouraging trend of smarter consumption,” Levinson said. “Israelis are comparing prices more than in the past, splitting up spending in order to save, making use of sales, and continuing to use the different benefits of consumer clubs as much as possible. The current economic situation has made our consumers more aware and more thoughtful. Despite all the steps taken by the citizens of Israel, a consumer’s proper economic behavior on its own isn’t enough to stop the rising prices. Government intervention is also needed in order to help stop the high cost of living.”
The war and the cost of living have also influenced how Israelis plan to spend their holiday season. One in five Israelis said they would stay at home during the holidays as a result of the security situation, and 30% said they would stay at home because of their financial situation.
In light of rising prices and the ongoing war, many Israeli consumers have started stocking up on food and water out of fear that escalating conflict may make grocery stores inaccessible. About 47% of the respondents said that they had bought extra food to prepare for a declining security situation. Some of the most common items Israelis are stocking up on include water, soft drinks, canned goods, and basic dry goods like rice.
About one third of Israelis make an effort to shop at businesses owned by soldiers in the reserves, and more than half prefer to buy produce marked as being grown in Israel. Those numbers are similar to the previous survey conducted at the start of 2024. “The fact that social solidarity hasn’t started to weaken even a year after the war broke out is evidence that there are values that Israelis aren’t willing to be flexible about, even when it comes to their pocketbooks.”
The war also had an influence on Israel’s saving habits. While 30% of respondents said the security situation is making them save more, another 30% said that the situation is making them save less. Those varied responses suggest the financial uncertainty faced by the Israeli public.
In light of the rising cost of living for Israelis, Levison criticized a government plan that could make comparison shopping harder. Under the plan, the government would undo a regulation requiring that all items in supermarkets be marked with physical price labels. Supermarket chains have said that this requirement is burdensome and that they prefer electronic signs listing prices.
“For consumers, the preference is for simple price stickers on the products, which make the price clear and allow comparison, even if they’re not eye-catching and impressive like bright dazzling signs,” Levinson said. “There’s no doubt that it’s preferable to keep the existing system, which can help stop price hikes as well.”
This article was translated from Hebrew by Leah Schwartz.
