Prices change daily as Israel’s inflation soars

Press, 24 October 1984, Page 28

Prices change daily as Israel’s inflation soars

NZPA-AP Tel Aviv A new Israeli immigrant fumbled through her wallet at the supermarket checkout counter trying to figure out how many of the crisp new banknotes were needed to pay her 18,000-shekel grocery bill.. With the clerk and other customers helping, the Swedish-born, middle-aged woman finally came up with the correct amount but it was clear she had no idea how much she had spent. Holding up a bright green 1000-shekel note, she asked: ‘How much is this worth in dollars?' ‘ ‘About $U52.20,” someone said. ‘That’s today,' another shopper added. “It will be less tomorrow.' Living with runaway inflation means never knowing the price of anything. The . value of the shekel changes every day and al; ways for the worse. Some appliance stores, restaurants and clothing boutiques post prices in dollars, in open defiance of a seldom-enforced law that makes it illegal to display prices in anything but shekels. The posted dollar price is then converted into shekels at the official exchange rate of the day. Many stores post no prices at all, leaving it to the customer to inquire. Supermarkets label most of their merchandise with small, stick-on tags, but the prices often change three, four and five times while it is sitting on the shelf. Like an archaeologist digging through the layers of ancient civilisations, a shopper can peel off the labels and chart the inflation. Take for instance, the price of a box of paper tissues, a fairly fast moving item. A box of the locallymade ‘Pleasant To Me' brand cost 488 shekels,

about 5U52.20 ($4.40) a few days ago, but underlying labels said 407 shekels and 345 shekels. In shekel terms, that is a 41 per cent increase in the few days.

The problem, however, is that shekel values have lost almost all their meaning. Any serious discussion of money, whether it is about Israel’s national Budget or the price of a candy bar, is done in dollars and cents. Economists predict that Israel’s rate of inflation this year will reach 900 per cent, a record. The inflation rate last year was 190.7 per cent, which was a record at the time. A professor of economics at Tel Aviv University, Assaf Razin, said Israel’s inflation was ‘a symptom of the more fundamental problems of the Israeli economy, (which is) financed to a large extent by printing money.' ‘The main thing is to concentrate in the next six to eight months on the international finance situation, to cut some expenditures in the Budget rather severely, 1 Professor Razin said. Efforts so far by the Government of the Prime Minister Mr Shimon Peres could be compared to trying to heal a multiple fracture with a sticking plaster. ‘lt'looks like we’re on the brink of a crisis,' he said, echoing the consensus of other leading economists. ‘From the experience of other countries, it looks like only a crisis can cure the situation and force the Government to change its course.' The Government has already announced a number of austerity measures, including a cut of $1 billion dollars from its $23 billion Budget. United States officials have also said Israel is planning to ask for an increase in total United States aid from SUS 2.6 bil-

lion to SUS 4 billion for 198485. When the shekel was introduced in February 1980, it was worth about 26 United States cents. Today the shekel is worth about one-fifth of a cent. When the shekel started, the largest note in circulation was for 50 shekels, then worth about SUSI 3. Today the largest note is for 5000 shekels, and it is worth about SUSII., Almost any purchase costs thousands of shekels. A pair of made-in-Israel leather sandals costs 7,000 shekels, or about SUSIS. At the other end of the scale, a posh Tel Aviv shoe store offers men’s imported Italian loafers for 87,560 shekels, or about SUSI9S. The amount of zeroes at the end of any price tag has

become intimidating. You can still use a pocket calculator to figure out the shekel price of a car — 6.75 million shekels, or about SUSIS,OOO for a Europeanmade economy model. But you run out of space when you try to calculate the shekel value of a brand-new, three-bedroom apartment in a middle-class Tel Aviv neighbourhood, where purchase prices soar . past SUSIOO,OOO. The “Jerusalem Post” reported recently that the Government might soon be forced to drop one or two zeroes from the shekel regardless of whether there is a monetary reform.. The reason: the standard, 15digit computer used by commercial banks cannot handle the huge shekel numbers any more.