Isranomics

Green Shoots of Economic Recovery: Shopping Trends on the Rise in Early 2025

by | Jan 21, 2025 | Economy | 0 comments

The past week has witnessed a notable resurgence in consumer spending, spurred by an unusually warm winter, a recently announced ceasefire with Hamas. This resurgence marks a stark contrast to the preceding two weeks of economic slowdown, as revealed by data from the Phoenix Gamma Index.

Traditionally, January is a sluggish period for the retail sector, falling right after the end-of-year sales boom, devoid of holidays, and typically hampered by winter’s chill. However, this year’s dynamics have shifted dramatically. The government’s decision to raise VAT from 17% to 18%, combined with widespread price increases by suppliers and food chains, has paradoxically driven consumer spending upwards.

The tourism industry has experienced the most significant growth, with transaction turnover soaring by 18% compared to the previous week. This surge is largely attributed to the return of several international airlines such as British Airways, Lufthansa, and easyJet. Despite a 2% drop in the average purchase price, the overall transaction volume surged by 20%.

Following close behind, the electronics and computer sectors have also shown robust recovery. The computers and cell phones segment recorded a 16% uptick in turnover, driven by a 5% increase in transaction numbers and a 10% rise in the average purchase amount. Similarly, the electricity sector noted a 12% increase in turnover, signalling renewed consumer interest after weeks of decline.

“This past week marks the first in 2025 where we observed positive growth in shopping cycles across most consumer and entertainment sectors,” stated Nadav Lahmani, CEO of Control at Phoenix Gamma. He added, “The return of international airlines and the expanded flight availability could potentially lead to reduced flight prices and a further decrease in the average purchase amounts within the travel industry.”

The current trends suggest a potential stabilizing effect on the economy, with increased consumer activity possibly setting the stage for sustained growth in the coming weeks. The interplay of external factors, such as geopolitical developments and climatic conditions, alongside fiscal policy changes, underscores the complexity of predicting consumer behaviour in the evolving economic landscape.

Image credit: freepik.com

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