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Government Plans Price Freeze

The government intends to freeze the price of many products within the next few months in a new effort to combat inflation, it was learned today. The price freeze — which would return, through the back door, government subsidies for basic consumer products –is one of the main elements in the new economic policy proposed by Finance Minister Yigal Hurwitz.

Hurwitz presented the plan to the Cabinet today at a special economic session but no decisions were taken. Hurwitz has also demanded a trimmed-down budget for the next fiscal year but so far he has failed to obtain his colleagues’ approval. The issue was referred to the Economic Cabinet, composed of a smaller number of ministers.

In principle the Hurwitz plan calls for a package deal. In exchange for the price freeze, the government would ask the Histadrut to waive the 21.6 percent cost-of-living increment planned for January. But, anticipating Histodrut’s refusal, the government is ready to announce the price freeze program unilaterally.

Until now it has been Hurwitz’s declared policy not to subsidize any products. If accepted, the new plan would mean large scale subsidies for a variety of products, including gasoline and basic food products. In practice, Hurwitz accepted the line which was advocated by Housing and Absorption Minister David Levy, who has insisted that there was no choice but to return to the policy of subsidies. Levy was the first to congratulate Hurwitz, but in the some breath he warned against abolishing the cost-of-living allowance. “This would receive no public support,” he said.

Histadrut Secretary General Yeruham Meshel had a similar reaction. He said Histadrut always favored subsidies for vital products but rejected the proposal to abolish the January C.O.L. allowance. “If the government wants to reintroduce — albeit too late — the subsidies of vital products,” said Meshel, “this is proof that all our arguments throughout the years were correct.” He said future cuts in prices did not justify giving up a compensation for price hikes made in the past.

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