Diamond Investment Savings Account Inflation In Israel Far Above Target D ecember's relatively mod- erate Consumer Price In- dex (CPI) rise of 0.8 percent provided little comfort to the Israeli government because it brought the 1994 inflation lev- el to 14.5 percent, far above the Treasury's 8 percent target. "We didn't achieve the goal we set because fruit, vegetable and housing prices helped accelerate inflation," Finance Minister Avra- ham Shohat said after hearing the Central Bureau of Statistics' announcement. According to the bureau, veg- etable and fruit prices, which shot up 56.1 percent last year, con- tributed 2.5 percentage points to the year's inflation. In 1993, veg- etable and fruit prices dropped 1.2 percent. Similarly, housing prices jumped 23.6 percent, contribut- ing 5 percent to inflation. The in- crease was similar to 1993's 23.7 percent rise. Even when these elements are factored out, inflation reached 9.8 percent, still higher than the gov- ernment's target. Inflation was 11.25 percent in 1993. Bank of Israel Governor Jacob Frenkel said December's index showed "that we must tighten our belts because the fight against in- flation will be a long one." Capital Holdings' chief econo- mist Jonathan Katz pointed out that last month's resurgence in housing prices went against most people's expectations and showed that housing prices are still not under control. In view of the Cabinet's moves to cut taxes and government spending, as well as the more moderate inflation rate, Mr. Shohat said he expects Mr. Frenkel will consider lowering in- terest rates. "There is no obligation for such a move from the governor, but I think it would be appropriate to do something regarding interest rates," Mr. Shohat said. Knesset Finance Committee chairman Gedalya Gal (Labor) said that despite last year's dis- appointing inflation rate, "we are entering a period in which infla- tion will decrease." The cost of a standard basket of goods and services for the av- erage urban family rose to NIS 6,355, including housing, in De- cember compared with MS 6,300 in November. Excluding housing, the basket cost NIS 4,890, compared with NIS 4,845. December's CPI rise brought the index to 119.7 points corn- pared with 118.7 points in No- vember. NEIL COHEN SPECIAL TO THE JEWISH NEWS T ♦ High rate - totally liquid account • $50,000 minimum ♦ ATM Accessible ♦ No penalty for early withdrawal ♦ FDIC insured ♦ Unlimited transactions at our branches Ann Arbor (Downtown) 665-4030 Ann Arbor (Main Centre) 665-4080 Bloomfield Hills Farmington Hills Grosse Pointe 258-5300 737 0444 - 882-6400 Visit Any Branch, Or Open By Phone Today, 1-800-968-4425 Republic Information Center Hours Monday-Friday 7 AM - 7 PM • Saturday 9 AM-Noon 1994 inflation was 14.5 percent. Don't Blame Rate On Housing, Produce he Israeli government protests vigorously that "were it not for the price of housing and fresh produce," all would be well. However, a quick look at the figures indicates that this is far from so. If housing and produce costs are removed from the 1994 con- sumer price index, the inflation rate was 9.8 percent, clearly be- yond the Treasury's 8 percent tar- get. Moreover, prices in several oth- er subsectors increased at a dou- ble-digit rate. Health care costs rose 15.8 percent, education 10 percent and transportation and communications 10.1 percent. So the major factor behind the debacle was as much Avraham Annual Percentage Yield. REPUBLIC BANK MEMBER FDIC API is accurate as of January I, 1995, and may change after that date. Minimum balance to open and obtain the disclosed API is 550,000. The more savings deposited the more interest. S100-S14.999, 2.52% API: S15,000-549.999, 4.11%; S50,000, -. 5.50% API. The Diamond Investment account is a variable rate account, therefore the interest rate may change after opening. Fees may reduce earnings on the account for balances that fall below S15.000. Individuals only. DISTINCT' V E PERSONAL BANKING How today's rising interest rates can benefit you. CDs 6.75% One Year Rates* (6.75% APY) 7.10% Two Year Rates* (7.10% APY) 7.25% Three Year Rates* (7.25% APY) If you are interested in taking advantage of today's rates, Shohat's inability to withstand public sector wage demands as it was Ya'acov Tsur's inability to act as agriculture minister (rather than the farmers' minister). Higher taxes and interest rates likely will push inflation down this year, but Israel is clearly a long way away from the kind of price stability fully developed countries aim for and achieve. While progress has been made in certain areas of the economy, there remain a great many struc- tural problems. Lobbies and pro- tectionism still abound. 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