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Food Prices Soar in Israel As Govt. Clamps Subsidy Lid

A stunned public was informed today that the price of frozen meat will rise by nearly 50 percent along with sharp increases in the prices of other basic commodities including sugar,.fuel and tobacco. The prices soared after Finance Minister Pinhas Sapir introduced new subsidy policies for which the Treasury hopes to get Knesset approval Thursday., before the current fiscal year ends Marc 31.

The government’s refusal to raise its price supports was expected to inflate prices but Israelis apparently were not prepared for the steep increase in meat prices and the 38 percent rise in the price of sugar. Sapir also signed regulations raising the price of gasoline by 12 percent, cigarettes by 15 percent, cooking gas, heating fuel and parafin by 17 percent. The price of flour was also on the way up though the exact percentage remained undecided today. On the other hand, Sapir apparently bowing to pressure from Histadrut, agreed not to raise the prices of milk, dairy products, eggs and poultry.

Price supports on those items are expected to be increased. Sapir told the Cabinet this week that the present subsidies the government pays to keep prices stable are no longer adequate and would have to be increased from IL 600 million a year to nearly IL 1 billion, something the government cannot countenance. He said the consumer will have to foot part of the bill.

Histadrut representatives who sat in on a meeting of the ministerial economic committee until four o’clock this morning were unable to agree to the government’s moves. Histadrut leaders will meet in emergency session tomorrow to decide the trade union’s response to the price hikes.

At a briefing for newsmen. Finance Ministry officials provided details of the various types of extra compensation that will be paid to low income families to counter the effect of the price increases. A family of four that earns IL 500 will receive an additional IL 14 per month Their costs will probably go up IL 8.7 a month, the officials said. A family of five which earns IL 700 a month will receive an additional IL 17.5 per month. Its costs are expected to increase by IL 11.6.

Ministry officials noted that the average price increase amounted to six percent, which compared with other countries suffering from inflationary problems, is relatively small. The prices of many staples will remain steady. These include fish, tea, coffee, potatoes, bread, cocoa and edible oils. But the sharply increased price of sugar is expected to affect the prices of such foods as cake, noodles, breakfast cereals, jams, confectionary fruits and fruit juices.

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