The Israeli Credit Insurance Company ("ICIC") has alerted that the sharp increase in the prices of food products is expected to affect not only households in Israel, but also business companies that rely on local demand. ICIC says that the increase in household food expenditures will partly be at the expense of a decrease in purchases of other types of products and the expected fall in demand will affect business companies, and some might collapse as a result.

ICIC's economic analysis shows that a 25% increase in the cost of food expenditures (excluding fruit and vegetables), which constitute 14% of the average household expenditures in Israel, is expected to be manifested in a slight decrease in household savings, but mainly in a reduction of other family expenditures since food expenditure is relatively rigid in comparison with other sectors. ICIC's economists estimate that, taking into consideration the fact that part of the cost increase of food expenditures will be at the expense of savings, and that there will be some changes in food purchases, a 2.5% decrease is expected in the demand for other types of products.

ICIC explains that a 2.5% decrease in local demand for non-food-related products is considered a substantial decrease, which is liable to lead to an erosion of profits and damage business in various sectors of the market, while the level of companies’ credit risks increase. 

ICIC's economists estimate that that the primary sectors expected to be affected as a result of the indirect influence of the increase for food products, are clothing, footwear, household furniture and furnishings (including electrical appliances), various household needs, and tourism.