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Sharp Price Increases
Shock Burdened Israelis
HUGH ORGEL
Special to The Jewish News
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sraelis shopping for food
were shocked and
angered Tuesday morn-
ing to find a standard loaf of
dark bread costing 55 cents
and a standard loaf of white
at 60 cents, overnight in-
creases of 29 and 33 percent
respectively.
The price hikes on those
and many other basic con-
sumer products and services
took effect at midnight Mon-
day.
They are a consequence of
Finance Minister Yitzhak
Moda'i's crash program to
reduce or eliminate govern-
ment subsidies, which have
kept market basket prices
relatively low and stable un-
til now.
Moda'i introduced a $1.25
billion supplemental budget
Tuesday. It contains a
$235.5 million cut in regular
government expenditures in
order to finance the absorp-
tion of tens of thousands of
immigrants from the Soviet
Union this year.
Moda'i told the Knesset
Social Welfare Committee
that only $62.5 million, less
than a quarter of the total
cuts, would come from min-
isterial budgets that benefit
low-income families.
Moreover, even though the
bread subsidies have been
abolished, the price of a loaf
will remain under govern-
ment control.
But that is hardly likely to
mollify consumers, for whom
the higher prices come at a
time of economic hardship.
Unemployment is running
at close to 10 percent of the
work force. And at least
1,500 Israeli families,
rendered homeless by soar-
ing rents, are living in tent
cities that have sprung up
all over the country.
They feel resentment
toward the Soviet
newcomers, whose housing
subsidies are responsible for
rent hikes that many Israeli
wage-earners simply cannot
afford.
A spokesman for the tent-
dwellers said, "While we
welcome the newcomers,
their arrival should not
drive up our rental costs and
should not send our food
prices rocketing."
The homeless also com-
plained that food prices are
going up at a time when po-
litical parties and Knesset
members are awarding
themselves higher state
allocations to rebuild or
redecorate the offices of new-
ly appointed ministers.
The subsidies for fresh and
frozen chickens, a staple of
the Israeli working class
diet, have been reduced by 7
percent. As a result, prices
have gone up by 6 and 10
percent respectively.
The price of margarine
rose 3 percent Tuesday.
Price rises for eggs, milk,
other basic foods and public
transportation will be an-
nounced shortly.
Moda'i also plans to reduce
child allowances paid by the
National Insurance In-
stitute. But he had to back
off from plans for a shorter
school day, after Education
Minister Zevulun Hammer
objected vehemently.
Other plans by the
Treasury include a 1.7 per-
Moda'i also plans to
reduce child
allowances paid by
the National
Insurance
Institute.
cent across- the-board
budget reduction that will
affect all ministries and save
about $80 million; a reduc-
tion in the number of
families eligible for second
child allowances from the
National Insurance In-
stitute, expected to save $45
million; and a $500 reduc-
tion in the "absorption
basket" for new immigrants.
In addition, the Treasury
expects to save $15 million a
year by shifting security
costs for El Al Airlines from
the government to the
airline itself.
Histadrut, Israel's labor
federation, is sharply critical
of the finance minister's
austerity program. Its secre-
tary-general, Yisrael
Kessar, and Haim Hab-
erfeld, head of its Trades
Union Department, com-
plained that the price in-
creases took effect at the
very moment negotiations
got under way for new wage
contracts for 1991-1992.
Haberfeld charged that the
government was "taking
away with the right hand,"
by way of reduced subsidies,
"what it was supposedly giv-
ing with the left," through
tax reforms.
Kessar said the new mea-
sures were "insensitive and
harmful to a large section of