Israelis woke up this morning to learn that their Pound has been devalued by another 1.9 percent and that the prices of essential commodities, fuel and public transportation will increase by an average of 20 percent later this week. Fiscal authorities said the two economic moves were not related.
The latest depreciation of the Pound, which now stands at IL 8.56 to $1, took effect at midnight last night. It was the 13th time the Pound has been reduced relative to the dollar since the policy of “creeping devaluation” was adopted by the Treasury in June, 1975. It was the second devaluation to be linked to a “basket” of foreign currencies which includes the Pound Sterling, the Deutschmark, Swiss Francs and Dutch Florins as well as the U.S. dollar. Export incentives will be increased as of today by 1.9 percent, the same rate as the latest devaluation, the government said.
The price hikes stem from a decision taken some time ago to drastically reduce government subsidies of basic consumer items. The Treasury wanted an IL 1 billion cut. Histadrut insisted on a cut of no more than IL 300 million. A compromise of IL 500 million was reached through negotiations. This means that most prices will go up by 20 percent, some by more and some by less.
COMMODITIES PRICES HIKED
Beginning this week, a loaf of bread will cost IL 1.25, up from IL 1.05; one liter of milk IL 2.20, up from IL 1.95; eggs IL 0.57, up from IL 0.49; public transportation (urban) IL 1.10, up from IL 0.90; margarine, IL 1.40 per 200 grams, up from IL 1.25; petrol, IL 4.75 per liter, up from IL 4.20. Airline fares and the travel tax will also rise, but as a result of the devaluation of the Pound rather than a reduction of subsidies. Israelis travelling abroad will have to pay IL 9.90 for each dollar, well above the devalued rate.
The effects of the price rises will be eased somewhat by the payment of new high cost of living allowances that are linked to the price index. The most recent allowances were paid this month. Israeli consumers will have to wait another six months for the HCL payment.
The Archive of the Jewish Telegraphic Agency includes articles published from 1923 to 2008. Archive stories reflect the journalistic standards and practices of the time they were published.
