Israel’s cost of living index for July was up 3 percent, a rise significant enough to provoke consternation at the Finance Ministry.
Many at the ministry feared the higher-than-anticipated rise heralds a new upward tendency in Israel’s inflationary spiral.
Most of the rise — 2.4 percent — reflected an increase in construction and housing costs. Building costs themselves rose 10.7 percent.
Professor Ya’acov Frenkel, who took over as head of the Bank of Israel only six hours before the July figure was announced, argued that the news was not all that bad.
While conceding that inflation could now well equal 20 percent for the year, he pointed out that the lion’s share of the July increase was due to a single component — increased housing costs. Inflation could therefore be held comparatively low, he reasoned, simply by restraining construction costs.
On Wednesday, the bank’s outgoing governor, Professor Michael Bruno, called for a drastic housing budget cut because fewer Soviet Jews are making aliyah. He urged the government to pare down the incentive programs to building contractors because the volume of building will not be as large as expected.
The Histadrut, the Employers Association and the Manufacturers Associations have all called for emergency measures to hold down annual inflation.
Employees will receive a 4.8 percent wage increase in August. The increase is due to be paid on Sept. 1.
The Archive of the Jewish Telegraphic Agency includes articles published from 1923 to 2008. Archive stories reflect the journalistic standards and practices of the time they were published.
