JERUSALEM (Jun. 25)
A sharp controversy has arisen within the government and the economic establishment over whether the Treasury should freeze the prices of basic commodities, a course strenuously advocated by Premier Menachem Begin for what, critics contend, are largely political reasons. Cabinet Secretary Arye Naor announced yesterday that a decision to freeze prices for an undetermined period was in fact taken at a meeting of the Ministerial Economic Committee attended by Begin.
Forlier reports that this was a full Cabinet decision were greeted by strong opposition from Treasury officials, the Bank of Israel and several prominent economists. Finance Minister Simcha Ehrlich was said to have been against it but was overruled by Begin. But according to some ministers who participated in yesterday’s meeting, no formal decision on prices was taken and none was expected until the Cabinet meets again in regular session next Sunday. Those ministers said Begin was in the minority at the meeting. Other senior sources said there was no intention to embark on a long – term price freeze and that Begin will prepare a detailed plan to submit to the Cabinet next Sunday.
The Premier seemed to be reacting to angry protests that greeted the lates price hikes. He declared last week that inflation was a “disease that can be cured” and that the time has come to put an end to the inflationary spiral. But Treasury officials warned that a freeze would only contribute to inflation because the public would have more money to spend on other consumer goods. The Bank of Israel called on the government to cut ministerial budgets proportionately and stated that as long as it is incapable of doing that it should raise prices as previously planned.