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Consumer Price Index Shows Only Modest Hike for May, but Economic Woes Increasing

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The relatively modest rise in the consumer price index in May — 6.8 percent — has failed to relieve the gloom of economists here who are predicting a new upsurge of inflation this month, perhaps to record highs.

Israeli workers are also unhappy. The low rise in the May index means they will not receive a cost-of-living increment with this month’s wages. There is already a rash of strikes and worse labor unrest is expected. More than 80,000 employes of municipalities and district and local authorities went on strike today and in the private sector taxi drivers and truckers resorted to work stoppages or slowdowns to back their demands to be allowed to charge higher rates.

The Central Bureau of Statistics which provided the May figures has recorded a 13-14 percent rise in prices in the first week of June alone. The increase for the entire month is expected to be well over 20 percent.

PRICES CONTINUE TO RISE

Prices have gone up by 70.7 percent since the beginning of the year and inflation is currently running at an annual rate of 260 percent. The total rise in the consumer price index is 373.9 percent.

The government’s inability to restrain the inflationary spiral has rendered the second wage-price freeze package deal that took effect in March virtually defunct. Finance Minister Yitzhak Modai nevertheless repeated his commitment to the package deal over the weekend and Premier Shimon Peres was expected to exert his influence to preserve it.

But with the prices soaring, economists expect the package to fall apart.

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