Cabinet Supports Sapir on Price Hikes

The Cabinet lined up today behind Finance Minister Pinhas Sapir’s price increases of last week but urged that the joint government-labor-management committee on inflation be reconvened at the earliest possible date to consider measures to combat the rising cost of living.

Health Minister Victor Shemtov of Mapam, told the Jewish Telegraphic Agency following today’s Cabinet meeting that he would propose a three-month wage-price freeze aimed at preventing a chain reaction of soaring prices that is likely to result from last week’s price hikes on many basic foods and commodities. The price rises were decided last Monday by a Ministerial economic committee chaired by Sapir. Sapir said the government could not maintain price supports on a large number of items to keep their prices stable and that the consumer would have to foot part of the bill.

At today’s Cabinet session he noted that the government’s food subsidies were originally intended to total IL 365 million last year but rising prices forced an expenditure of over IL 500 million. He said that in the fiscal year beginning to day, the government would pay out IL 776M in food subsidies. But Sapir contended that even after the spectacular rises in the prices of meat, sugar and flour last week, Israelis were still paying below the world average for those commodities.

He said compensation to low income families for the higher prices would amount to IL 4 per person per month while the real cost of the rises would be only IL 2.5 per month. He said the average Israeli’s burden would be eased further by income tax reductions that go into force today. Several Ministers urged-that additional cost-of-living allowances be paid before the Passover holidays.