Sticker Shock

Supermarkets Capitalize on 0.99 Shekel Round-up to Raise Prices

Tnuva, Israel’s biggest maker of dairy products, announces voluntary price cuts.

Supermarket chains are exploiting the new regulations barring merchants from posting retail prices in denominations smaller than any coin in circulation. Not only have they rounded up their prices but raised them, often by several percent, a survey by TheMarker has found.

The new directive by Israel’s Consumer Protection and Fair Trade Authority, which wentinto effect January 1, puts an end to a favorite practice of retailers: setting prices that end with 99 agorot, then rounding up to the closest shekel figure in the absence of any one-agorot coins. The authority sent warnings out two months again informing retailers that they could not advertise prices that were impossible to pay to make their goods appear cheaper. (Israel no longer has one or five-agorot coins in circulation.)

But a look at the website of organic grocery chain Eden Teva Market found that prices had risen on 89% of its products, and the mark-up was not just a matter of rounding up. For example, the price of 5% salty curd cheese (bulgarit) was raised from 19.89 shekels to 21.20, a 7% increase.

At Super-Sol, Israel’s biggest food retail chain, the prices for 65% of products that had to be adjusted to comply with the new directive were marked up. For example, Olivia’s Shakshuka Sauce now costs 13.70 shekels instead of the previous 11.89 shekels, a 15% increase.

The chain that raised its prices the least was Mega, where only 43% of the products with adjusted prices had increases beyond rounding up, but the phenomenon was still evident. For example, a package of mozzarella cheese now costs 28.80 shekels instead of 27.69 shekels, a 4% increase.

The regulations that were set after the one- and five-agorot coins were phased out of circulation call for prices on goods to be rounded down if they ended with one to four agorot, and rounded up if they ended with five through nine. Excluded from the authority’s directive were utilities and other services whose prices are set by meter, or products whose prices are controlled by the government.

Until the new directive went into effect, the pricing of goods with nine agorot was relatively widespread, according to a survey by the Israel Consumer Council conducted in October. Of the 40 basic supermarket products examined, 59% had prices that ended with nine agorot and 41.7% had prices that ended with 99. Only 2.1% ended with zero. The survey also found that the supermarket chains which used prices that ended with nine agorot the most were Yenot Bitan and Makhsanei Shuk.

However, one area in which prices should drop is dairy products, with Tnuva, Israel’s biggest maker of dairy products, announcing Thursday that it would voluntarily cut prices by between 10% and 20% for additional products beyond 5%-fat white cheese and 38%-fat sweet cream.

The two products were placed under price controls earlier this week by the government, slashing prices 20%. Most of the additional products that will see price cuts are white cheese and cream products not subject to controls.

Tara Dairy, the No. 3 producer, also said it would be issuing a product price list in the coming days that would include lower prices for its dairy products. Strauss Israel said it would cut prices for white cheese of all sizes and fat contents by 20%.

Ofer Vaknin