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Price Controls Set Up

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The Likud government slapped price controls on a wide variety of consumer products today after an inflationary spurt yesterday sent prices soaring by 10-20 percent. The move immediately drew fire from the Israel Manufacturers Association. Minister of Commerce and Industry Gideon Patt who ordered the price ceilings, admitted that the measure was distasteful to him as a member of the Liberal Party but said circumstances forced him to take it.

The price controls apply to only 170 of the 350 consumer items that rose in price yesterday, among them food products, cosmetics, soft drinks and household cleansers. The manufacturers of such items will need permission from the public committee on prices before they can introduce further hikes. Last month, Patt ordered price controls on 35 other items.

Avraham Shavit, president of the Manufacturers Association, warned Patt that he was “barking up the wrong tree.” The Minister conceded that Shavit may be right but observed that the government had to start somewhere to control inflation. Shavit blamed the government and other public authorities for the price increases. “When the costs of production go up, so must the costs of manufactured goods,” he said.

Shavit noted that the government has just raised the cost of fuel, electricity and municipal rates all of which contributed to the rise in production costs. In addition, he said, employes’ paychecks in July contained advances on their cost-of-living allowances due in October and banks are raising their interest rates.

Patt suggested that if the need arose, he would expose certain goods to foreign competition in order to reduce prices. Several manufacturers warned that if such a step was taken they would be forced to shut down and fire their workers. Patt retorted that if some companies close, others will stay open.

The Commerce Minister was scheduled to meet today with Histadrut Secretary General Yeruham Meshel to discuss the latest price rises. Meshel welcomed the price controls as a timely decision to curb inflation. He was expected to demand that the manufacturers be compelled to stamp the retail price on their goods so that merchants cannot buy them at the old prices and sell them at the new ones.

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