Inflation efforts confuse Israelis

Press, 7 November 1984, Page 6

Inflation efforts confuse Israelis

NZPA-AP Tel Aviv The Israeli Government’s new economic recovery plan went into effect yesterday and was greeted with confusion and scepticism by Israelis.

Some private economists predicted that the wage and price freeze could collapse before its three-month expiration date, and others said that they expected shortages, especially of imported items such as coffee and chocolate.

The plan froze all prices, wages and taxes at last Friday’s level in an effort to stem inflation, which has been soaring at an annual

rate of 800 per cent. The so-called package deal was signed after a month of haggling among representatives of the Government, the Histadrut trade union federation, and manufacturers. Violators will face a maximum penalty of three years in jail and a fine of 2 million shekels (SUS76OO). Information hotlines set up by the Government’s Ministry of Industry and Trade were flooded with telephone calls from confused customers.

Government officials worked to prepare a list of prices frozen for more than

400 common items. Shop owners said that they did not know if they could raise the cost of items they had been selling for below the listed price. Government officials said that some of these details were still being worked/j out.

Pointing to a can of sardines that costs 340 shekels (about $1.30) a grocery store owner, Maher Zaloum, in Arab east Jerusalem said, “I used to have to change prices that I put on in the morning by the afternoon. Now I won’t have to. The Government is promising to lower inflation. If they do that, it will be good.”

But, he said, “So far I have no idea what is happening.” Israelis have seen their shekel devalued by 98.8 per cent since it was instituted four years ago, in spite of efforts by a line of Finance Ministers. An economist, Elhanan Helpman, of Tel Aviv University said, ‘lf the freeze is maintained for three months, then there will be a severe outburst (of inflation) as soon as it is lifted. “But there is a good chance it will not survive the year. “I think this plan has more to do with politics than with economics.”