TEL AVIV (Jul. 15)
The cost-of-living index rose by 14.9 percent in June, according to figures released by the Central Bureau of Statistics today. It is the highest rise ever for the month of June but about five percent lower than the Finance Ministry, the Bank of Israel and most economists had predicted.
This is expected to take some of the steam out of Histadrut demands in its current negotiations with the government over the emergency economic program. Had the June price index topped 20 percent, the trade union federation would have had a strong bargaining point for additional compensation for wage-earners.
Finance Minister Yitzhak Modai attributed the June rise to effects of the second wage-price package deal which the government has replaced by its emergency program to be in effect for the next three months. The June figure includes price increases that were partly the result of reduced price support subsidies.
It does not, however, reflect the sharp rise in prices at the beginning of July when subsidies were slashed again and the Shekel was devalued. Those elements will be manifest in the July price index, to be released on August 15. A 25 percent increase has been forecast.
By then, however, the government hopes its emergency economic measures will have been fully implemented, resulting in a sharp drop of the cost-of-living index to between 4-10 percent by next October.