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Consumer Index Rises 1.8 Percent; Housing Costs Expected to Escalate

The 1.8 percent rise in October’s Consumer Price Index published here Wednesday was greeted with cautious optimism by Finance Minister Shimon Peres, who stressed that it was worse a year ago.

But Dov Lautman, chairman of the Manufactures Association, warned that continuing inflation was eroding profitability.

The price index rose at an average annual rate of 18 percent during the first 10 months of 1989, and is expected to close the year at 20 percent inflation.

That will be cushioned by cost-of-living allowances paid most Israeli wage-earners. But they are not due until March 1990.

The latest figures surprised no one. The 0.3 percent hike in the price of winter clothing and shoes was expected.

However, the 4,25 percent rise in the cost of housing in October was more troubling, because it will escalate sharply if the anticipated influx of immigrants from the Soviet Union and Ethiopia materializes in the next few years.

Yisrael Kessar, who was re-elected Monday to a second term as secretary-general of Histadrut, urged the government to begin new housing projects immediately.

Peres, interviewed on army radio, said one solution was quicker building.

“We have to shorten the planning and bureaucracy,” Peres said, adding that if “everyone would take less interest in party issues and more in state issues, the situation would improve.”

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