Five Years After Israel's Social-justice Protests, Prices Are Back Up

Rallies had impact only in the year after, a survey by TheMarker shows/

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The height of the social justice protests in Tel Aviv, August 2011.Credit: Tal Cohen

The social-justice protests that proliferated over the summer of 2011 had their intended effect of lowering prices for the Israeli consumer – but the impact lasted only a year before evaporating, according survey by TheMarker conducted together with the consumer research company Czamanski & Ben Shahar.

In the year after 25-year-old Daphne Leef pitched a tent in the Habima Square in Tel Aviv, launching the wave of street protests, prices for many goods and services, in particular for food, showed declines. But they began rising soon after, particularly for housing.

Home prices rose a relatively modest 1.3% in the year after the protests, but after that the pace accelerated and as of March 2016 they were up 32%, compared with a 12% increase in the average wage.

Food prices actually fell 2% in the year that followed. That was a particular impressive feat because the consumer prices index as a whole rose 1%. But over the last five years, while the CPI rose just 2%, the price of food, including fresh fruits and vegetables, climbed at more than double that pace.

And what about cottage cheese?

Tnuva inadvertently lit the flames of consumer ire when it upped the price of its best-selling product in the spring of 2011, prompting a Facebook protest that quickly morphed into Leef’s street protests. The price of cottage cheese has drifted higher, albeit less than the CPI, so that a standard container now sells for 5.73 shekels ($1.48), up 10 agorot, or less than 2%, in five years.

Overall, dairy prices are 3% less than they were in 2011 and bread prices are unchanged, but meat prices, after falling 3.5% in the year after the protests, are now 8% higher.

The immediate impact of the giant rallies and tent cities that summer was enormous. Prime Minister Benjamin Netanyahu formed a government committee chaired by Manuel Trajtenberg to address the key grievances of protesters.

Less than a year later, then-Communications Minister Moshe Kahlon launched the great shakeup of the cellphone market that cut charges by 26%, by far the biggest savings yielded by the protests, and enabled subscribers to change providers quickly and easily. A few protest leaders, most notably Stav Shaffir, launched political careers.

Businesses became super-cautious about raising prices, too. But protest leaders failed to keep the momentum going after rallies across the nation in early September that drew an estimated 450,000 people.

The impact lingers in heightened consumer awareness and the government’s campaign to inject more competition into everything from food retailing to bank fees.

Last week, the “Cornflakes Law” easing imports on dry food like breakfast cereal and pasta, was finally approved. A shake-up of the consumer loans sector, via the Strum committee’s recommendations to split off the credit card companies from their bank owners, is moving forward. Kahlon is struggling to rein in housing prices.

Still, Israelis suffer from a higher cost of living than their counterparts in Europe or the United States. A survey of 500 Israelis conducted for TheMarker by the Panels Research Institute found that half believed the protests had no impact at all. Another 24% said the effect was simply in raising consumer awareness and the public debate on cost-of-living issues. Another 7% said the protests had only a small/short-term effect.

Housing prices remain the main concern of Israeli consumers. The poll found that 32% regards that issue as No. 1 in the cost of living, far ahead of the 9% who pointed to food prices. Another 15% said it was the high cost of living in general.

Apart from communications costs, the next big item where the hard-pressed Israeli consumer found some relief in the last five years was in clothing costs. Apparel fell 2% the first year after the protests and continued falling so that prices are down 11%, compared to 2011.

That is due mainly due to increased competition in the retail sector, which has seen the entry of more international fashion chains, which offered apparel at lower prices and forced their Israeli rivals to match them.

Communications costs ironically were not on the protesters’ agenda in 2011, but were the biggest consumer gain of the last five years. What it demonstrates is that change can happen when the government is determined to make it happen.

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